Rs 5K cr IPOs held up due to tepid retail investor mood
15 April 2015 6:17 AM IST
At least 11 companies, planning to mop up over Rs 5,000 crore through IPOs, are yet to hit the capital market amid lukewarm demand from retail investors despite positive market trend.
Market analysts said demand from investors in the primary segment has been weak despite continued buoyancy in the secondary markets. “There has been lack of participation from the retail investor in the primary market,” CNI Research Head Kishor Oswal said.
Only three companies -- Inox Wind, Adlabs Entertainment and Ortel Communications -- have floated their initial share- sale plan so far in 2015, while VRL Logistics has scheduled to launch its IPO on Wednesday. According to Prime Database managing director Pranav Haldea, at present, 11 companies plan to garner Rs 5,010 crore and have secured approval of the Securities and Exchange Board of India (Sebi). IPO plans have been put on hold even as the BSE benchmark Sensex has witnessed a gain of 5.6 per cent since January.
In the past six-year, Haldea said, 103 companies which received Sebi approval (since January 2009) to raise a total of Rs 47,840 crore allowed these to lapse, despite approvals being valid for a period of one year and after having incurred a lot of time and costs.
In addition, 62 firms which had filed their offer documents with Sebi (since January 2009) to collectively garner Rs 19,973 crore withdrew their offer documents. Even in 2014, only six main-board IPOs came to market to rake in Rs 1,261 crore, and there was just one Follow-on Public Offer (FPO) that mopped-up Rs 497 crore.
Under the Sebi guidelines, the regulator give clearance on IPO documents within 30 days after receiving satisfactory reply from the lead merchant bankers to the clarification or additional information sought from them.
The market watchdog has sought clarifications from four companies — Manpasand Beverages, Shree Shubham Logistics, Precision Camshafts and S H Kelkar and Company.
Small & medium stocks continue to outperform blue chips this year
Continuing with last year’s winning spree, the stocks of small and medium companies on the BSE have outperformed their large-cap peers so far this year. While the BSE small-cap index has gained 7.71 per cent to 11,942.03 so far this year, the mid-cap index has clocked a rise of 7.27 per cent to 11,127.42. In comparison, the 30-stock Sensex consisting of large-caps has risen 5.61 per cent to 29,044.44. The BSE bellwether index touched all-time high of 30,024.74 on March 4 this year. The small-cap index scaled its 52-week high of 12,002.18 on Monday, while the mid-cap index had hit its record peak on March 4 at 11,180.70.
“The valuations of some of the mid-cap and small-cap scrips are attractive which is drawing investor interest in these stocks. Besides, healthy retail investor participations is also helping smaller scrips,” said Alex Matthews, Geojit BNP, Research Head. In a bear market, said marketmen, investors tend to invest in large-cap stocks, while they prefer to book profits in smaller stocks. Although retail investors been lukewarm towards the primary market, they have been participating in the secondary market, analysts said.
Smaller stocks are generally being bought by local investors, while overseas investors focus on blue-chip scrips, they added. Stock markets did extremely well in 2014 due to impressive foreign fund inflow, formation of a new majority government at the Centre and economic reforms.
Market analysts said demand from investors in the primary segment has been weak despite continued buoyancy in the secondary markets. “There has been lack of participation from the retail investor in the primary market,” CNI Research Head Kishor Oswal said.
Only three companies -- Inox Wind, Adlabs Entertainment and Ortel Communications -- have floated their initial share- sale plan so far in 2015, while VRL Logistics has scheduled to launch its IPO on Wednesday. According to Prime Database managing director Pranav Haldea, at present, 11 companies plan to garner Rs 5,010 crore and have secured approval of the Securities and Exchange Board of India (Sebi). IPO plans have been put on hold even as the BSE benchmark Sensex has witnessed a gain of 5.6 per cent since January.
In the past six-year, Haldea said, 103 companies which received Sebi approval (since January 2009) to raise a total of Rs 47,840 crore allowed these to lapse, despite approvals being valid for a period of one year and after having incurred a lot of time and costs.
In addition, 62 firms which had filed their offer documents with Sebi (since January 2009) to collectively garner Rs 19,973 crore withdrew their offer documents. Even in 2014, only six main-board IPOs came to market to rake in Rs 1,261 crore, and there was just one Follow-on Public Offer (FPO) that mopped-up Rs 497 crore.
Under the Sebi guidelines, the regulator give clearance on IPO documents within 30 days after receiving satisfactory reply from the lead merchant bankers to the clarification or additional information sought from them.
The market watchdog has sought clarifications from four companies — Manpasand Beverages, Shree Shubham Logistics, Precision Camshafts and S H Kelkar and Company.
Small & medium stocks continue to outperform blue chips this year
Continuing with last year’s winning spree, the stocks of small and medium companies on the BSE have outperformed their large-cap peers so far this year. While the BSE small-cap index has gained 7.71 per cent to 11,942.03 so far this year, the mid-cap index has clocked a rise of 7.27 per cent to 11,127.42. In comparison, the 30-stock Sensex consisting of large-caps has risen 5.61 per cent to 29,044.44. The BSE bellwether index touched all-time high of 30,024.74 on March 4 this year. The small-cap index scaled its 52-week high of 12,002.18 on Monday, while the mid-cap index had hit its record peak on March 4 at 11,180.70.
“The valuations of some of the mid-cap and small-cap scrips are attractive which is drawing investor interest in these stocks. Besides, healthy retail investor participations is also helping smaller scrips,” said Alex Matthews, Geojit BNP, Research Head. In a bear market, said marketmen, investors tend to invest in large-cap stocks, while they prefer to book profits in smaller stocks. Although retail investors been lukewarm towards the primary market, they have been participating in the secondary market, analysts said.
Smaller stocks are generally being bought by local investors, while overseas investors focus on blue-chip scrips, they added. Stock markets did extremely well in 2014 due to impressive foreign fund inflow, formation of a new majority government at the Centre and economic reforms.
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