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D-Mart scripting return of the IPOs?

Niti Kiran     March 21, 2017

A whopping 102 per cent listing gains by RK Damani-led Avenue Supermarts, popularly known as D-Mart, seem have set the right tone for the primary markets, which can open the initial public offerings (IPOs) floodgates.

The market barometer is nearing an all-time high and this bullish trend is clearly visible in the primary market activity. "After looking at the facts of this IPO, we can conclude that the broader trend of the market is very much intact and [going] more northwards, and investors are ready to pay premium for quality," says Jimeet Modi, CEO of SAMCO securities.

IPOs seem to have gained steam in the current financial year. Till date, a total of 23 IPOs have raised over Rs 27,000 crore, the highest over the past six years. During the last financial year, 24 IPOs raised around Rs 14,500 crore. This came after a lull for nearly three years between 2011/12 and 2014/15 when as few as 18 IPOs hit the markets.

D-Marts' stellar debut certainly qualifies as the biggest listing over a decade in terms of listing gains. According to data from Prime database, in the current financial year, only 10 IPOs got listed (including Avenue Supermarts) at a premium of over 20 per cent to their respective issue prices. Of these, only Quess Corp, which listed in July 2016, managed listing gains of over 50 per cent to its issues price. Four IPOs saw listings below their issue prices in 2016/17, including those of Larsen & Tubro Infotech (it got listed 6 per cent below its issue price) and ICICI Prudential Life Insurance (it listed 1 per cent below its issue price). After a drought of IPOs, Wonderala Holidays made its entry, followed by several companies who made their presence felt. Some of the forthcoming IPOs in this fiscal include CL Educate and Shankara Building Products.

"In a way, it's not a very good sign for equity investors as IPOs suck liquidity out of secondary markets. However, we are in a firm, structural bull market and it will last for some more years. So investors need not worry much," says Modi.

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