Forthcoming Public Issues Can Increase India’s Market Capitalisation by $160 Billion

India’s general market capitalisation could surge by a whopping $160 billion over the next 12-18 months, owing to an increase in equity fundraising via IPOs. Note that this figure does not include the upcoming initial public offering of LIC. Leading investment banking company Credit Suisse says that although public market activity has been straggling in 2021, it appears IPOs have been a rage.

Equity fundraising via public issue has hit a record high of more than $18 billion within the first six months of this year. So let’s dive in to know what impact IPOs had on the market.

Impact of IPOs on the Market

Here are some highlights in relation to the impact of initial public offerings on the Indian market:

• Companies have mobilised Rs. 72,755 crores by going public in 2021.
• With five months left in this calendar year, DRHPs filed with SEBI are worth Rs. 89,000 crores.
• India’s overall market capitalisation has increased by $50 billion owing to these initial public offerings.
• The increasing number of IPOs are minimising the shortcomings in relation to qualified institutional placements and the right issue of shares.

Let’s look at some of the largest companies that have launched their IPOs recently:

• Zomato
• Devyani International
• CarTrade Tech
• Nuvoco Vistas
• Aptus Value
• Chemplast Sanmar
• Glenmark Life Sciences

Following are some other companies that have filed papers with the capital market regulator:

• Tega Industries
• Adani Wilmar
• VLCC Health Care
• MedPlus Health Services

Investors can visit this page from time to time so that they can stay updated with upcoming IPOs.

What to Expect Going Ahead?

Credit Suisse believes that upcoming public issues will be that of companies belonging to the financial or discretionary sectors. That said, equity fundraising via IPOs has been dominated by financial companies over the past few years.

This could have a multiplier effect from the growth standpoint as financial institutions lever up to provide capital. Till now, this has only reduced leverage in the financials of these companies.

On the other hand, the money raised by non-financial companies may impact the GDP in the near term. This will lead to an increase in consumption and investment.

Final Word

With non-IPO public fundraising still lagging in relation to retail and mutual funds going strong, it appears that absorption of paper won’t pose a challenge. It is likely that the offer for sale (OFS) portion of the IPOs could help companies to minimise the pandemic-induced erosion of risk capital, thus reviving growth.

Frequently Asked Questions

1. How can one invest in the upcoming IPOs?

One can subscribe to IPOs via the Angel One app. While new investors have to open a DEMAT account first, an existing customer can place an IPO order by logging in to his/her web trading account.

2. Who decides the price band of an IPO?

The company, along with lead managers of its IPO, decide the price band of the public issue.

3. How long does an IPO remain open for subscription?

An IPO has to be open for subscription for at least 3 working days. However, the IPO closing date cannot be more than 10 working days from the date of opening.