The petrified investors whose panic selling led to an ugly rout in equities in March look all excited as the benchmark indices are almost up 53 per cent since the March depths. But, are the ones waiting to tap the market frenzy equally eager?
Data sourced from Prime Database shows that initial public offerings (IPOs) worth Rs 33,516 crore of 34 companies have received approvals. Of these, seven companies have received approvals after the government introduced a nationwide lockdown. These include National Commodity & Derivatives Exchange, Stove Kraft (refiled), UTI AMC, Barbeque-Nation Hospitality, Likhitha Infrastructure, Computer Age Management Services and Happiest Minds, amounting to about Rs 7,610 crore, 23 per cent of the total public offerings.
Another three IPOs of Jaikumar Constructions, Gland Pharma and Kalyan Jewellers, together worth Rs 1,875 crore are awaiting regulatory approval.
As per the norms, a public issue or a rights issue needs to be launched within 12 months from the date of issuance of observations by Securities and Exchange Board of India (SEBI). However, the SEBI extended the validity period of approval for IPOs and rights issues by six months in April 2020 in the wake of the pandemic. "The validity of the SEBI observations where the same have expired/ will expire between March 1,2020 and September 30, 2020 has been extended by 6 months, from the date of expiry of such observation, subject to an undertaking from lead manager of the issue confirming compliance with Schedule XVI of the ICDR Regulations while submitting the updated offer document to the Board," the circular said.
Year 2019 was a dull year for IPOs with only 16 companies mopping up around Rs 12,362 crore, the lowest since 2015. The overhang of coronavirus has limited the public offers hitting the stock markets in the past eight months to just two-SBI Cards & Payment Services which opened in March and Rossari Biotech Ltd that opened in July. Therefore, till date, only Rs 10, 837 crore funding has been raised from the above two issues which is 12.3 per cent below the 2019 levels. If the companies choose not to sit on the fence any longer, it could take the momentum to a two-year high.
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