IPO buzz next week as 13 companies hit primary market to raise Rs 8,644 crore

New Delhi: The IPO market will be bustling next week, with four companies, including Bajaj Housing Finance, set to launch their initial share-sale to raise a total of Rs 8,390 crore.

Besides these four main-board IPOs, nine SMEs are preparing to debut with their maiden public issues next week, targeting to collect Rs 254 crore. Together, these 13 firms are looking to raise Rs 8,644 crore through IPO.

Munish Aggarwal, Managing Director Head - Equity Capital Markets, Equirus, expects the next two weeks to be hectic in terms of issuance activity in IPO markets.

"While this seems to indicate that the markets are overheating, we believe that this is more symptomatic of the attempt by most issuers who have valid Sebi observations and decent traction with investors to try and utilize their financials for Fiscal 2024 to launch IPOs," he said.

According to Sebi, financial data in the Red Herring Prospectus (RHP) must be less than six months old at the time of the IPO. Therefore, September is the last month when companies can use their FY24 financials to launch IPOs, he added.

The four main-board IPOs include that of Bajaj Housing Finance, which is expected to mobilise around Rs 6,560 crore, P N Gadgil Jewellers ( Rs 1,100 crore), Kross Ltd ( Rs 500 crore), and Tolins Tyres (Rs 230 crore).

Of these, the initial share-sales of Bajaj Housing Finance, Kross Ltd, and Tolins Tyres will open for subscription on September 9 and conclude on September 11, while that of P N Gadgil Jewellers will open on September 10 and close on September 12.

Additionally, Arkade Developers is expected to float IPO on September 16 and Western Carriers India may also soon come out with its public issue.

So far this year, more than 50 main-board IPOs have been launched, along with one Follow-on Public Offering (FPO) by Vodafone Idea.

The public issue of Shree Tirupati Balajee Agro Trading Company is underway and IPOs of Baazar Style Retail and Gala Precision Engineering closed earlier this month.

Before that, IPOs of 10 firms, including Ola Electric Mobility and Brainbees Solutions Ltd, the parent firm of online e-commerce platform FirstCry, were concluded in August.

"We believe that the amount raised through main-board IPOs which was Rs 80,000 crore till end of August, will expand to over Rs 1.25 lakh crore by the end of this calendar year," Equirus' Aggarwal said.

Sunil Damania, Chief Investment Officer, MojoPMS, said: "As long as the secondary market remains strong, we can expect continued growth in the primary market for IPOs. However, if some IPOs start listing below their offer price, it could reduce this momentum and slow down IPO activity." The companies are tapping the primary market to raise funds for expansion plans, retire debt, support working capital requirements and provide exit route to the existing shareholders.

Apart from the main-board, SMEs launching their IPOs next week are -- Aditya Ultra Steel, Shubhshree Biofuels Energy, Share Samadhan, Gajanand International, SPP Polymers, Trafiksol ITS Technologies, Excellent Wires and Packaging, Innomet Advanced Materials, and Envirotech Systems.

These companies are aspiring to mobilize between Rs 12-45 crore each through public issue.

The IPOs for Aditya Ultra Steel, Shubhshree Biofuels Energy, Share Samadhan, and Gajanand International will begin on September 9; SPP Polymers and Trafiksol ITS Technologies on September 10; Excellent Wires and Packaging and Innomet Advanced Materials on September 11; and Envirotech Systems on September 13.

Recently, IPOs have garnered significant subscription levels. In August, main-board IPOs were subscribed on an average over 75 times, while the year-to-date average for 2024 is 66 times. For SME IPOs, the average subscription in August was 290 times, with a year-to-date average of more than 259 times, data showed.

Vaibhav Porwal, Co-founder, Dezerv, said the recent surge in SME stocks and strong listings gains in some of the companies are largely driven by three key factors -- liquidity, FOMO effect and robust retail participation.

"The fear of missing out (FOMO) on quick gains has spurred continued investment in SME IPOs." "While this trend might persist in the short term, risks like market corrections and regulatory interventions could temper the frenzy in the market. Investors should exercise caution and focus on fundamentals, as the SME stocks could correct sharply if sentiment shifts," he added.

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said IPOs of SMEs without any track record and sound financials are getting oversubscribed many times, driven by retail investors chasing listing gains. These are excesses that need to be checked.

Recently, the regulator has aired concerns around activity in SME IPOs and experts expect some slowdown in activity in that market.