November 19, 2021
Trends reveal that most companies are avoiding the IPO route owing to multiple reasons.
Only 60% of total manufacturing potential was exhibited in Q1 of 2021, limiting IPO uptake.
The drop in industrial bank credit as well as limited use of existing fundraising provisions have also contributed.
Experts maintain that IPOs have the potential to raise more than US$ 13.46 billion in 2021.
Individual companies that have recently listed shares in the Indian stock market through Initial public offers (IPOs) have raised an average of US$ 138 million (Rs 1029.8 crore), according to data from Refinitiv, a London Stock Exchange Group business tracker. With a total of 93 IPOs, the trend follows the pattern in 2010 wherein 56 IPOs were listed and more than US$ 2.02 billion (Rs 15,000 crore) was raised through the listing of shares. The listing and uptake of IIPOs are on the rise. However, trends reveal that the larger number of companies are avoiding the possibility of listing as a fundraising option despite the increase in valuations. Multiple reasons have been attributed to this development including: (i) inadequate utilization of existing fundraising options, (ii) manufacturing activity being utilized only upto 60% capacity in the first quarter of the year, (iii) bank credit in relation to industries has only been documented at 26% as of August 2021.
Industrial experts maintain that close to US$ 13.46 billion (1 lakh crore) worth of funding could be raised by the end of Q4 of 2021. The financial year has already witnessed the listing of shares from 32 companies that have successfully raised more than US$ 9.96 billion (Rs 74,000 crore). In the view of the Reserve Bank of India (RBI), 2021 could be deemed as the ‘Year of the IPO’