Big-ticket realty IPOs worth over Rs 12,000 cr keep shy of market

Outlook for big-ticket realty IPOs is quite speculative now and will remain hazy for some more time. I think the companies are still waiting for the best time in the realty market. What is holding up these firms is the lack of prospective investors who are now suspicious of stock valuations. These companies,in fact,are always keen to get some credible investors to command premium in the IPO environment. Unless and until they see continuous uptrend in the market movement,they would not take the big risk, said Value Research chief executive officer Dhirendra Kumar.

Experts are of view that a surge in investor scepticism after the global recession has trapped many realty companies in illiquid stocks with sagging asset values which may stagnate their IPO move for at least a year or so. Unless you have a very solid track record in property management or a compelling portfolio of well-priced assets,you would not see a rush of new IPOs in the alternative investment market, said a fund manager at an asset management company in Mumbai.

Barring one or two realty companies,the market had seen many flop shows in the IPO game recently. DB Realty was forced to discover its book at the lower end of the price band. The poor show of these companies could have led them to put their IPO plans on hold for the time being. It is a temporary phenomenon and they will run the show at the beginning of the markets upward movement, said Dara Kalyaniwala,vice president investment banking of Prabhudas Lilladher.

The uncertainty on the interest rate front and banks reluctance to lend are the other worries. Interest rates are set to rise as the Reserve Bank of India has started exiting from the accommodative monetary policy and began hiking short-term lending rates. The impact of rising interest rates on the real estate market is a big worry. Companies,who want to raise huge funds through the IPO route,are helpless despite getting the Sebi clearance.