India's IPO market faces potential disruptions as several companies risk missing their listing deadlines due to a market downturn. Firms like Credila Financial Services and Dorf-Ketal Chemicals are among those with approvals nearing expiry. Valuation concerns and weak secondary market performance are prompting companies to delay or refile, impacting the IPO pipeline after two strong years.

Clock ticks for a dozen Indian IPOs as approvals near expiry

A wave of initial public offerings in India is at risk, with their approvals nearing expiry as a downturn of equities is making companies more cautions about coming to the market.

Among prominent names within two months of their deadlines, EQT AB-backed education loan provider Credila Financial Services has been planning to raise about 50 billion rupees ($536 million). Other prospective issuers include Dorf-Ketal Chemicals India Ltd., which has been attempting to sell shares for nearly a year, as well as non-bank lenders Hero FinCorp Ltd. and Veritas Finance Ltd.

If sentiment fails to improve in the coming weeks, these companies may be forced to refile their draft prospectuses with the Securities and Exchange Board of India and restart the approval process.

Companies increasingly opting to hold back listings is adding to the signs of weakness in India’s IPO market after two record years for proceeds. Market participants point to valuation mismatches and the weak secondary market performance as key factors behind the delays.

“This may not be an opportune time to launch IPOs, as market sentiment remains fragile amid ongoing geopolitical tensions, elevated crude prices, and a weakening rupee,” said Dharmesh Mehta, chief executive officer, DAM Capital Advisors Ltd. “In such an environment, companies may prefer to wait for greater stability in global and domestic markets before tapping investors, in hopes of achieving better pricing and stronger participation.”

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Underscoring the valuation concerns, about 12 of the 18 mainboard IPOs listed so far this year are currently trading below their offer prices, with seven declining between 11% and 35%.

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