July 2021 – Get set for the IPO mela
Here is a list of the 12 IPOs that are all set to hit the market in the month of July.
|IPO Issuer||Sector||Fresh Issue||Offer for Sale||Issue Size|
|Seven Islands Shipping||Logistics||Rs400cr||Rs200cr||Rs600cr|
|Arohan Financial Svcs||Microfinance||Rs850cr||Rs950cr||Rs1,800cr|
|Shriram Properties||Real Estate||Rs250cr||Rs550cr||Rs800cr|
|Utkarsh SFB||Small Finance||Rs750cr||Rs600cr||Rs1,350cr|
|Clean Science Tech||Chemicals||-||Rs1,547cr||Rs1,547cr|
|Glenmark Life Science||Pharmaceuticals||Rs1,160cr||Rs540cr||Rs1,700cr|
|Nuvoco Vistas Cement||Cement||Rs1,500cr||Rs3,500cr||Rs5,000cr|
|Aadhar Housing Fin||Home Finance||Rs1,500cr||Rs5,800cr||Rs7,300cr|
|Total Sum to be Raised via IPOs – Jul-21||Rs14,210cr||Rs17,375cr||Rs31,585cr|
If all IPOs go through, as planned, in Jul-21, a total of Rs.31,585cr would be raised via the IPO route. This is just the beginning. There are bigger names like Paytm, Bajaj Energy, Nykaa and LIC slated to hit the IPO market before the end of fiscal 2022. What is more interesting is that these 12 IPOs are spread across 9 different industry segments. So, it is not like the IPOs are trying to ride any particular sectoral or thematic trend. Here are the mega IPOs.
Three mega IPOs to boot
Out of the 12 IPOs slated to hit the market in July 2021, just 3 IPOs will account for 64% of the total IPO collections with the remaining 9 IPOs accounting for the balance 36%. Let us look at the 3 mega IPOs in greater detail.
- Nuvoco Vistas, the cement arm of Nirma Group, will raise Rs5,000cr via its IPO. The pick-up in cement volumes and robust cement prices across India resulted in most cement companies reporting record profits and margins in Mar-21 quarter. Nirma Group had acquired the Indian arm of Lafarge and the cement division of Emami to create Nuvoco Vistas. If the cement and grinding capacity are added up, Nuvoco Vistas has capacity of close to 23.5 million tonnes per annum (MTPA).
- Aadhar Housing Finance is backed by Blackstone with ownership of 98.7%. The IPO of Rs7,300cr will allocate Rs.5,800cr to giving partial exit to Blackstone with the balance Rs1,500cr being fresh issue. It is poised to ride the sharp revival in housing demand, which even the likes of Chris Wood of Jefferies are betting on. Aadhar Housing is one of the biggest players in the low-income housing segment.
- Finally, the much talked about Zomato could be the real test of the attractiveness of the India digital story investors. Zomato is a household name, so visibility and brand recall is hardly an issue. However, with Rs7,875cr on offer, it remains to be seen what response can be elicited from the retail and HNI segments. Info-Edge just scaled down its OFS.
Some of the IPOs are quite understandable in the current circumstances. Vijaya Diagnostics is clearly enthused by the solid performance of KIMS, which listed in June. Ami Organics and Clean Science Technology will try to make the best of the global trend towards India in specialty chemicals. Post pandemic, most global buyers of speciality chemicals have shown an inclination to diversify their input sources away from China. Then, of course, there is the IPO of Glenmark Life Sciences, the API arm of Glenmark. For a long time, Glenmark struggled to get better valuations. In this situation, listing the specialized API (active pharma ingredients) business will be a big boost for the group as a whole. All these IPOs are about being in the right place at the right time.
It will be a test of liquidity in markets
If all the IPOs go through smoothly, we could see in excess of Rs31,500cr being collected in July alone. While half this money would come from QIBs, the other half has to come from retail and HNI investors. That would be the challenge. Normally, it is the enthusiasm of the retail and the IPO-funded HNIs that determines the listing price and subsequent price action. The only risk is that if a few large IPOs underperform post listing, it could dampen the IPO euphoria in the market. However, at the peak of any bull market, that is the kind of risk you can live with!