Mondays Budget could make or mar the capital-raising plans of a lot of Indian corporates. Unsure about the stock-market mood post-Budget,corporates have been feverishly raising capital in recent weeks. In the last week of June alone,Rs 6,553 crore was raised,amounting to over 56 per cent of the Rs 11,714 crore raised during the April-June quarter. In comparison,only a minuscule Rs 872 crore was raised during the January-March quarter.
According to Prime Database,during the April-June quarter of FY10,one initial public offering or IPO amounting to Rs 278 crore; one follow-on public offering or FPO amounting to Rs 23 crore; three rights offers for Rs 29 crore; three ADRs/GDRs (American and Global Depository Receipts) for Rs 125 crore; and 10 qualified institutional placements for Rs 11,259 crore have already been done. Over 96 per cent of the total money raised was through QIPs.
Mahindra Holidays was the solitary IPO in the entire quarter,while Rishabdev Technocables was the only FPO. The leading QIP issuers during the quarter were Unitech (Rs 4,410 crore),Indiabulls Real Estate (Rs 2,656 crore),HDIL (Rs 1,674 crore),Sobha Developers (Rs 526 crore),Shree Renuka Sugars (Rs 506 crore) and PTC (Rs 500 crore).
If the Budget is perceived to be market friendly,the secondary market is likely to rise further from its current mid-14,000 level. And if the secondary market is buoyant,those sentiments will rub off on the primary market as well.
Elaborating on the high stakes,Prithvi Haldea,chairman of Prime Database,says,There are plans to raise nearly Rs 3,00,000 crore of capital from IPOs alone. If the Budget disappoints and the secondary market declines,capital-raising plans will have to be put on hold.
Amitabh Chakraborty of Religare Capital Markets is optimistic. Any disappointment from the Budget will see the market react negatively,but only for the short term. As the dollar weakens,the excess worldwide liquidity will come into emerging markets. As for the impact on capital-raising plans,he says: If the market corrects,QIPs will happen at lower valuations. Funds that are reluctant to commit money will be attracted by the lower valuation.
In addition to IPOs,corporates plan to tap other avenues as well: follow on public offers (FPOs),rights issues,and QIPs. Data compiled by Prime Database says that the first set of IPOs/FPOs to hit the market post-Budget will be from 19 companies that have already received the Sebis approval to raise Rs 8,959 crore. This includes two public sector units NHPC (Rs 2,500 crore) and Oil India (Rs 1,400 crore).