Five companies,including state-run Rashtriya Ispat Nigam,have filed initial papers for listing in the first two months of this fiscal,even as tough market conditions have forced at least two entities to shelve their IPOs during this period.
During the April-May period of 2012,Rashtriya Ispat Nigam Ltd (RINL),Goodwill Hospital and Research Centre,Fast Train Cargo,Ace Tours Worldwide and C Mahendra Infojewels have filed their respective Draft Red Herring Prospectus (DRHP) with market regulator Sebi for the purpose of launching an initial public offering (IPO).
Out of these,Sebi has sought clarification or additional information from the merchant bankers of C Mahendra Infojewels and Goodwill Hospital,as per the information till May 25,2012 available with the regulator.
Two companies — packaging materials maker Plastene India and auto parts manufacturer Samvardhana Motherson Finance — shelved their IPO plans last month citing poor response from investors amid weak broader market.
Goodwill Hospital had also pulled out its IPO in January,2012,but once again filed draft papers in May to mop up Rs 98 crore through share sale. The IPO was shelved after the issue failed to get subscription of even one per cent of its shares on sale. It was the first company to withdraw its IPO in 2012.
State-run RINL has submitted a DRHP last month to divest 48.898 crore shares,or a 10 per cent stake,through an IPO. Besides,logistic services provider Fast Train Cargo has filed papers in May to raise funds by issuing 52.83 lakh shares constituting to 48.99 per cent stake of the company.
Most of the companies plan to utilise IPO proceeds for capacity expansion as well as working capital requirements.
Experts opined that in the current tough market conditions only a few companies are turning toIPO route to garner funds.
“I feel that there has been a lower appetite among investors for IPO in a weak secondary market but companies that have sound fundamentals and offers attractive valuations would continue to lure investors,” Geojit BNP Paribas Research Head Alex Mathew said.
The BSE benchmark’s Sensex has lost 1,186 points or nearly seven per cent in the current fiscal to close at 16,218.53 on the last trading session of May.
In April,two companies — C Mahendra Infojewels,whose operations include manufacturing and exporting diamond studded jewellery and tour and travel agency Ace Tours Worldwide– filed their draft prospectus.
C Mahendra Infojewels is offering 1.3 crore equity shares of Rs 10 each through the IPO. The promoters are looking at divesting 34.21 per cent stake to investors.
Besides,Ace Tour Worldwide is planning to raise IPO through issue of 81 lakh shares by diluting 52.88 per cent stake in the company.
Interestingly,in 2012,at least 17 companies let lapse the go-ahead from the securities market regulator for their respective IPOs,according to SMC Global Securities.
Going ahead,”I expect sluggish market conditions would continue and some recovery would be seen in the second half of the year. The move would seen companies coming out with their IPO plans,” Mathew added.