The success of Just Dials initial public offering (IPO) has raised hopes of a revival in the primary market and could prompt a number of companies to launch their issues in the next 2-3 months.
According to Prime Database,as many as 24 companies (excluding SMEs) have received IPO approvals from Sebi and could potentially raise a total of Rs 7,100 crore. Sebi approval is valid for one year.
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Of the 24 companies,three companies (Asian Logistics,Preludesys India and state-owned divestment candidate Rashtriya Ispat Nigam) have their approvals valid until the last week of June and may raise a little over R2,600 crore.
Just Dials issue,which was the largest offer by an Indian web-based and local search company,was subscribed almost 12 times on Wednesday. The Rs 950-crore IPO drew a strong response from FIIs and high net-worth individuals. The qualified institutional buyers’ (QIB) portion was subscribed 10.12 times,while the non-institutional book was subscribed 22.34 times with bids mostly coming in from Indian corporates and HNIs.
Data show an additional nine companies have approvals valid untill the July-September 2013 quarter,and may cumulatively raise Rs 1,745 crore. The list includes Vishwaraj Sugar Industries (Rs 374 crore),IFCI Factors (Rs 750 crore),UIC Udyog (Rs 108 crore) and TV Vision (Rs 135 crore),among others.
The remaining 12 companies have their approvals valid untill October 2013 and May 2014 and could potentially raise Rs 2,715 crore.
Eight companies have filed their offer documents with Sebi and are awaiting approval. They include Ortel Communications (R1,000 crore),BSCPL Infra (Rs 650 crore),Wonderla Holidays (Rs 275 crore),and Jyoti CNC Automation (Rs 240 crore). Incidentally,Delhi-based India Finsec (earlier known as Dynasore Leasing & Holding Private) is launching its issue on Friday and is targeting to raise R6 crore by listing on the SME platform,a notification on Sebi’s website showed.
However,primary market experts warned the success of Just Dial’s IPO should not be looked at as a revival in the overall primary markets. We could see very few,selective companies tapping the primary market in the near term. Investors are only eyeing good opportunities…issues with good quality and pricing (valuations), said Prithvi Haldea,CMD,Prime Database. Bankers highlighted the fact that Just Dial’s success is an encouraging trend,but argued that the primary market continues to lack depth. The market will welcome good quality and rightly priced issues; however,retail investors will remain sceptical,they said. “Not every IPO can do well because the market is still recovering and the appetite is low. The response and success of the issue would depend on the sector it belongs,its quality and maturity of business, said a senior SBI Capital Markets official.