IPO mop-up plunges 32% to Rs 35,456 cr in H1: Report

Just 14 companies raised Rs 35,456 crore through main-board primary share sales in the first half of the fiscal, down 32 per cent from the year-ago period when 25 issues had mopped up Rs 51,979 crore.

But according to Prime Database, the IPO pipeline is strong with 71 issues worth Rs 1,05,000 crore having Sebi approvals and another 43 worth about Rs 70,000 crore awaiting approval. Of these 114 planned issues, 10 are new-age tech companies, which are looking to raise roughly Rs 35,000 crore.

The overall collection would have been much lower had it not been for the Rs 20,557-crore LIC issue, which constitutes as much as 58 per cent of the total amount raised during the first half of the year, as per Prime Database.

IPO (initial public offer) fund-raising declined by 32 per cent in the first half of the current fiscal to Rs 35,456 crore by 14 main-board issues, down from Rs 51,979 crore raised through 25 IPOs in the corresponding period of FY22. Of the total, as much as Rs 20,557 crore or 58 per cent was raised just from the LIC issue, Pranav Haldea, the managing director of Prime Database Group, said in a note on Thursday.

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The overall public equity fundraising also dropped by 55 per cent to Rs 41,919 crore from Rs 92,191 crore during the period, he added.

While the LIC issue was the largest ever in the country at Rs 20,557 crore, this was followed by Delhivery (Rs 5,235 crore) and Rainbow Children's (Rs 1,581 crore). Only one of the 14 IPOs (Delhivery) was from a new-age technology company, clearly indicating the slowdown of issues from this sector after the disastrous issues from Paytm and a few others.

While the overall market response to issues moderated with only four of the 14 IPOs receiving a mega response of over 10 times (with one getting more than 50 times), and three were oversubscribed by over three times. The balance of seven was oversubscribed 1-3 times.

Response of retail investors also moderated with their average number of applications dropping to 7.57 lakh in comparison to 15.56 lakh in FY22 and 12.49 lakh in FY21. LIC got the highest number of retail applications (32.76 lakh), followed by Harsha Engineers (23.86 lakh) and Campus Activewear (17.27 lakh).

Similarly, there was a 32 per cent drop in the value of shares applied for by retail (Rs 23,880 crore), showing lower enthusiasm from retail. Total allocation to retail was Rs 9,841 crore or only 28 per cent of the total IPO mobilisation (slightly up from 23 per cent in FY22).

According to Haldea, the response was further muted by moderate listing performance. Average listing gain fell to 12 per cent from 32 per cent in FY22 and 42 per cent in FY21. Of the 14 issues, six gave 10 per cent returns with Harsha Engineers giving 47 per cent followed by Syrma SGS (42 per cent) and Dreamfolks (42 per cent). As many as 11 of the IPOs are trading above the issue price as of September 26.

Only four issues had a prior PE/VC investor who sold shares in the IPO. Offers-for-sale by such PE/VC investors at Rs 3,349 crore accounted for just 9 per cent of the total IPO amount and OFS by promoters at Rs 2,206 crore accounted for 6 per cent and the fresh capital stood at Rs 8,641 crore.

The first half saw 41 companies filing their offer documents in comparison to 87 last year.

Haldea feels the IPO pipeline remains strong as 71 IPOs worth Rs 1,05,000 crore are sitting with Sebi nod and another 43 worth about Rs 70,000 crore are awaiting Sebi approval. Of these 114 planned issues, 10 are new-age tech companies which are looking to raise roughly Rs 35,000 crore.

Meanwhile, SME issues saw a huge increase in the first half with 62 issues collecting a total of Rs 1,078 crore, up from 30 issues collecting Rs 346 crore in the year-ago period.