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IPO fundraising: India’s IPO fundraising halves in FY23; two debutants deliver multibagger returns

Reflecting the muted performance of equity markets in fiscal 2023, the funds raised through initial share-sales in FY23 more than halved, compared with previous financial year.

A total of 37 companies hit the primary markets in FY23 raising just over Rs 51,000 crore as against 53 IPOs garnering over 1.11 lakh crore in FY22, according to data sourced from Prime Database.

Among the public offers in 2022-23, two companies, Hariom Pipe Industries and Venus Pipes, have delivered multibaggers returns to investors rising 222% and 111% respectively.

During this period, India’s biggest IPO of Life Insurance Corporation of India was launched with much fanfare but failed to bring cheer to the investors. The stock is currently trading 43% below the issue price. The initial share sale of India’s largest insurer was subscribed 2.95 times.

Meanwhile, slowing down the trend of internet companies hitting the markets, only one new-age tech startup Delhivery made its debut this fiscal. Paytm, Nykaa, Zomato and Policybaazar were some of the marquee tech companies that entered the public markets in FY22.

Delhivery shares are currently at the bottom of the IPO charts in FY23 with negative 32% returns from the offer price. The stock has come under severe scrutiny after multiple institutional and pre-IPO investors exited the company post the lock-in period.

Of the 37 IPOs launched in the financial year 2022-23, around 14 of them are trading below issue price and 22 of them are currently above the offer price.”The demand for IPOs started dwindling from Q3FY23 and only good quality companies ventured to launch IPOs at reasonable valuations. Hence, the number of IPOs that hit the market was limited,” said Kulbhushan Parashar, Founder & Managing Director of Corporate Capital Venture.

Going ahead, experts say most companies planning their IPOs will play a waiting game before they file their DRHP as the last three months have been fairly bearish and volatile owing to a meltdown in global markets.

Further, markets regulator SEBI returning IPO documents is at a historical high and the actions taken has cautioned investment bankers while filing documents.

After Paytm’s IPO debacle, Sebi has turned cautious while giving clearance to the initial share sales as it has returned the preliminary papers of half a dozen companies, including Oravel Stays, which operates hospitality chain OYO, in over two months.

Parashar says the current muted trend in the IPO market is a short-term fluctuation.

“The upcoming months, especially from Q2FY24 should witness an acceleration in filings – with both the corporates resorting to efficient capital and the regulator offering much-needed clarity on the disclosures to quicken the processing time,” he said.

“Several factors affected investors’ sentiments in IPOs in FY23 such as high valuations, geo-political crisis, high commodity prices, higher inflation, repeated interest rate hikes by central banks to calm down inflation, fear of recession, and weak GDP prospects,” said Ravi Singh, Vice-President and Head of Research, Share India.

(With data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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