Draft IPO paper filings surge after poll results

A significant surge in interest among companies to launch initial public offerings (IPOs) has been observed following the Lok Sabha election results. In August alone, 17 companies submitted draft red herring prospectuses (DRHPs) to the Securities and Exchange Board of India (SEBI), marking the highest monthly filings in over a year, as per PRIME Database. This follows 16 companies filing draft papers in July. Comparatively, in the first half of 2024, an average of nine companies filed DRHPs with SEBI each month.

Market participants believe the IPO market will remain active for the rest of the year due to the current market conditions. Ramnish Kochgave, President of investment banking firm Elara Capital, noted that many companies were waiting for the election results before finalizing their plans. They had their documents ready but wanted to assess the post-election market environment before proceeding.

Notable companies that have filed DRHPs recently include JSW Cement, Hero Fincorp, Niva Bupa Health Insurance, Ecom Express, Kalpataru, Hero Motors, and Smartworks Coworking Spaces. Analysts noted that while demand for IPOs has been robust due to higher valuations in the secondary market, the valuations of these IPOs are reasonable, are not cheap. Vinit Bolinjkar, head of research at Ventura Securities, mentioned that most companies are generating profits for their clients and that the quality of IPOs is good, even if valuations are slightly elevated.

Recent IPOs have performed particularly well, with companies like Ola Electric Mobility, Brainbees Solutions, Interarch Building Products, and Unicommerce eSolutions seeing gains of 30-100% from their issue prices after debuting this month.

Investment bankers report continued strong interest from companies in the unlisted space, driven by favorable market conditions and India’s solid macroeconomic fundamentals. Kochgave emphasized that there has been no slowdown in filings or companies seeking pitches, predicting a robust IPO market for the year ahead. The average issue size in July and August exceeded ₹2,300 crore, slightly below the ₹2,500 crore average seen in the first half of 2024.

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