Too early to say primary market is seeing a revival

Too early to say primary market is seeing a revival
  • Even after the Syrma SGS IPO received an overwhelming response, experts believe that another IPO season is not on the horizon.
  • The regulatory approval for at least 30 IPOs received in the last financial year will lapse by the end of the year. 31 IPOs received an approval this financial year.
  • Companies will watch the performance of the next few IPOs and the secondary markets before opening issues, say two market experts that Business Insider spoke to.
Even before the public offer of Syrma SGS Tech was oversubscribed 33 times last week, three companies – Digit General Insurance, Concord Biotech and Balaji Solutions – had filed their papers with the markets regulator in the third week of August to go public.

Another IPO DreamFolks is all set to open for subscription this week. Yet, experts are not convinced that another IPO season is on the horizon.

“It’s too early to say that the season of IPOs has started. A lot of companies in the pipeline will be watching for two things – the response that the next few IPOs get and also the market momentum. If the markets remain volatile, companies will allow their approvals to lapse,” Pranav Haldea, managing director of Prime Database told Business Insider India.

While a few companies like PharmEasy, Inox Green Energy and Nandan Terry withdrew their draft papers, scrapping IPO plans, at least four more companies’ approvals will lapse by the end of August. The approvals for another 15 will lapse by the end of the year.

“IPOs are a once-in-a-lifetime event for companies and they would want to do it at the perfect time. If the market is not giving them the valuation that they expect, they will not go ahead,” said Haldea.


Only Utkarsh Small Finance Bank has re-filed its IPO papers, even as many more companies that planned to go for an IPO in the last financial year let it lapse.

Over 32 IPOs that received a go ahead in 2021-22 have been put on hold, while 31 more received an approval in 2022-23. Of these 31 from the current financial year, only Syrma and DreamWorks have gone ahead and opened their issues to the public.

A lot of companies file DRHPs assuming issues will sail through but a number of factors like valuations and demand for fresh issuances among domestic and foreign investors play a key role. “There are 10-12 conditions that they have in mind during the filing and many of these conditions may change,” said Arun Kejriwal, founder of Kejriwal Research & Investment Services.

A lot of IPOs from last year that are still in the pipeline, had issue sizes between ₹400-800 crore. However there are a few like Emcure Pharma which had plans to raise over ₹4,500 crore as well. The decision to go ahead with an IPO will not depend on the size of the issue, but on pricing, says Kejriwal.

“When the momentum is good, subscriptions and listings are good, it’s possible to slip in a bad issue but not when the market is still picking up. After RBI capped the amount that HNIs (high networth individuals) can borrow to invest in IPOs to ₹1 crore, they will have to invest their own funds and that will make a huge difference to subscriptions,” says Kejriwal.

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