₹77,000 cr IPOs on hold as Ukraine crisis hits markets

Experts said the weak IPO scenario is likely to continue till the end of the fiscal first quarter as Russian President Vladimir Putin is pursuing his plan at all costs.

51 companies were set to mobilize According to capital markets researcher Prime Database, Rs 77,000 crore through IPO after getting the approval of the market regulator.

This excludes 44 companies, including Life Insurance Corporation of India, that have filed their IPO documents with the Securities and Exchange Board of India (SEBI) but have not received approval.

Companies have hit the pause button on transactions after stocks in India and globally after Russia’s attack on Ukraine reported heavy losses. The war has caused a surge in energy prices and sent India’s currency to a record low.

Experts said volatility in equity markets is likely to continue due to geopolitical uncertainties and India’s dependence on imported crude.

“Historically, activity in the primary market is seen only when the secondary market is bullish. While the market has been volatile since October, the past few months have seen an extraordinary amount of volatility, resulting in the launch of just three IPOs in 2022,” said Pranav Haldia, Managing Director, Prime Database.

Adani Wilmar, Vedanta Fashion and AGS Transact go public this year, are moving around 7,429 crores.

Comparing the situation in 2013, Haldia said that it is worth the IPO. Those who filed Sebi-approved Rs 80,000 crore or share sale papers were hit by the poor market conditions that year.

Some of the big IPOs that have gone public this year are Go Airlines (India) Ltd., API Holdings Ltd. (parent of PharmEasy), Delhivery, Emcure Pharmaceuticals Ltd., Gemini Edibles & Fats India Ltd. and Penna Cement. There are plans to gather about these companies 25,000 crores.

LIC’s mega IPO, which was expected to launch by the end of March, is now likely to happen in the next financial year, but the government has not taken a final decision. The government is planning to mobilize more and more 75,000 crore by selling 5% stake in India’s largest insurance company.

“Given the size of LIC’s IPO, it will certainly require the support of foreign investors. At present, they are being sold heavily. It is the domestic investors who are supporting the market,” Haldia said.

“Geo-political conditions as well as sharp correction in equity markets have fueled the IPO market windfall. The valuation multiple in the market has dropped significantly, which has made large institutional investors more apprehensive, and the flip side of this is that companies have no option but to raise capital at low valuations. Gaurav Mistry, Associate Partner, DSK Legal, said, “Low valuations and risk averse investors are the right recipe for a slowdown in the primary market.”

The disappointing IPO market followed a blockbuster year in 2021 when nearly 50 companies raised 1.1 trillion from the markets.