Tania Kishore Jaleel:
Mumbai, Sept. 17,2010
| 12 issues coming this month to raise Rs 4,000 cr. |
A SEBI directive and a soaring secondary market have led to a flurry of initial public offerings aimed at making it before September 30.
Some Rs 4,000 crore will be raised through 12 IPOs that are being pushed through during this period. Since September 14, any given day of the month has seen at least two ongoing IPOs to date, and the rest of the month is going to be no different, at least until September 27.
"A big reason for this flood of offerings is because of the September 30 deadline set by SEBI," said Mr Sanjay Jain, Executive Director and Head of the Investment Banking Division at JM Financial Consultants. SEBI has said that if companies have issuances that hit the market after September 30, then they will have to publish their June quarter results. Those that enter the marker before that can file the DRHP with their March-end annual results.
What is interesting is that the June quarter results of many of the listed companies were below expectations, and that of yet-to-list companies are likely to be the same, said analysts. It is not a surprise then that they don't want to raise funds using their June quarter results.
Strong liquidity
The other reason for the spate of IPOs is the robust state of the stock market itself. "Liquidity is strong at the moment and stocks are looking up; this is one of the reasons why a lot of companies are ready to hit the markets now," said Mr S. Ramesh, Chief Operating Officer of Kotak Investment Banking.
The Sensex has risen close to six per cent over the last two weeks and reached a 34-month high of 19,600 during this time, and foreign institutional inflows too have been strong. FIIs have invested Rs 7,862 crore in the net in equities during the last week.
"Nobody is confident of the market, so now when there is liquidity many issuers want to take advantage of this window of opportunity," said Mr Jagannadham Thunuguntla, Head of Equity at SMC Capital.
No danger of crowding out
Some brokers believe that the Hindu religious period of Shraddh has also led to a lot of companies rushing to enter the market.
This is a span of time, running from September 24 to October 7, when Hindus do not make any purchases, and usually there is a drop in sales of cars, houses and other large assets.
Though the IPO market is currently abuzz with action, merchant bankers say that there is no danger of crowding out or bunching up of issues. "These are all small issues and liquidity will not get sucked out due to the number of issues. The total amount raised by all these issues is rather small," said Mr Apurva Shah, Managing Director, Corporate Finance, at Deutsche Equities India. The mega issues of Coal India and ONGC will hit the market after the second week of October and they will face no liquidity crunch, said brokers. Also, the turnaround of IPOs is now 12 days and investors get refunded quickly, said Mr Thunuguntla.
Tirupati Ink's follow-on offer closed on Friday, while Career Point Infosystems' second day is on. Eros International Media and Microsec Financial Services opened on Friday. Monday will see four companies announcing their issues all of which will close before September 27.
No comments:
Post a Comment