The primary market will be abuzz with activity in the week ahead with five companies scheduled to launch IPOs (Initial Public Offerings) worth over ₹7,000 crore.
Analysts said the strong sentiment in the secondary market could help these IPOs and advise investors to subscribe to these issues at least for listing gains. Bankers said retail investors may consider issues like Tata Technologies and IREDA over others because of the limited money available for investments.
The flood of IPOs in this short period is unlikely to hurt liquidity in the main markets, said bankers. “The money from one issue may not be available for the other; but except for that, the broader market may not see any effect,” said Satyen Shah, president, Nuvama Investment Banking and Fixed Income.
“The inflows from an institutional and HNI level may not be a worry since they have enough capital, but at retail level due to a limited corpus, we may see some discretion from investors based on the valuation and sectors of the companies.” ET spoke to analysts for views.
Tata Technologies
IPO Size: ₹3,042 crore
Price Band: ₹475-500
Open-Close Date: November 22 – 24
Analysts are recommending subscribing to the first IPO from the Tata Group in over two decades citing its growth prospects and cheap valuations compared to peers. IDBI Capital, which recommends ‘subscribe’ to the Tata Technologies IPO, said the issue values the company at 33 times FY23 earnings as against 63 times of peers. Market experts said the issue will be in high demand. “Tata Tech is the most hyped issue from the lot and will get the highest subscription, but it will be difficult for small retail investors to get any allotment,” said Arun Kejriwal, founder, KRIS, an investment consultancy firm.
IREDA
IPO Size: ₹2,150 crore
Price Band: ₹30-32
Open-Close Date: November 21 – 23
Analysts are recommending subscribing to the IPO of this state-owned finance company, which funds renewable energy projects. SBI Securities said the company is poised to capitalise on the government’s increased focus on renewable energy, aiming for 50% of energy needs to be met by renewables by 2030. “IREDA may become the favoured issue of investors for reasons like an affordable price band, and good performance in the last two years due to government push to the industry,” said Kejriwal. At the upper end of the price band, the company is valued at price-to-book value of 1.1 times, said SBI Securities. Samco Securities’ research head Apurva Sheth suggests subscribing for listing gains
Gandhar Oil Refinery
IPO Size: ₹500 crore
Price Band: ₹160-169
Open-Close Date: November 22- 24
Analysts are mixed on the IPO of Gandhar Oil, which makes products for personal care, healthcare and lubricant industries, among others. While some are recommending a subscribe to the issue for listing gains with the stock trading at a 30% premium over the issue price in the grey market, others feel the IPO may not be ideal for long-term investors at the issue price. “Gandhar Oil can be compared to Galaxy, which has done well, despite being an expensive share,” said Kejriwal.
Flair Writing Industries
IPO Size: ₹593 crore
Price Band: ₹288- 304
Open-Close Date: November 22- 24
Market participants are expecting that the recent success of Cello World IPO and the listing would encourage investors to consider Flair’s IPO also. “The recent success of the Cello World IPO will rub-off on the Flair Writing Industries’ offer, and investors may flock for it with the same kind of expectations,” said Kejriwal. On November 6, the shares of Cello World had listed at a premium of 28% over its issue price.
Fedbank Financial Services
IPO Size: ₹1,092 crore
Price Band: ₹133- 140
Open-Close Date: November 22- 24
Analysts said long-term investors could consider the IPO of Fedbank Financial Services, a non-banking finance company promoted by Federal Bank, with caution at this juncture as sentiment in the sector has been impacted by the Reserve Bank of India’s (RBI) decision last week to raise risk weights on cash credit, personal loans, and consumer durable loans by lenders. “Fedbank, while may not be directly affected due to the recent RBI circular on lending, we expect to see an impact on the entire banking sector,” said Kejriwal. Samco’s Sheth recommends subscribing to the IPO at least for listing gains. “Looking at the DRHP and company financials, we will mostly recommend a subscribe or subscribe for listing gains,” he said.
