Recent IPOs in India have been the business talk of the year, nearly 35 new companies have listed for the IPOs so far in 2021, and most of them have seen their share prices increase significantly. In recent times, however, we have seen some subdued listings as well, which might cause investors to be a bit more selective.

With a record amount of companies wanting to go public and a record number of cumulative fund raisings, the Indian primary market is experiencing its best phase ever. On average, the last month has seen a filing by companies seeking to list on the exchanges every day, which could be seen as another indication of a healthy pipeline and outlook.

The Securities and Exchange Board of India (SEBI) reported that more than 30 companies filed their draft offer documents with the capital market regulator in the last one-month period giving a much needed rise to IPOs in India. 

A company that wants to list on the stock exchanges must file a draft document or prospectus with SEBI, and once it has been approved by the regulator, it can begin the process of launching its initial public offering (IPO).

According to information on SEBI Website, the last month has seen notable entities like VLCC Healthcare, Adani Wilmar, FSN E-Commerve Ventures (Nykaa), Anand rathi Wealth, Fino Payments Bank, ESAF Small Finance Bank and Star Health & Allied Insurance kickstart their IPO plans by filing the draft document with the regulator.

Usually, the regulator responds with queries, based on the disclosures made in the draft document, and if the company is able to satisfactorily answer all the questions, it is let go. A regulator also looks for any pending or ongoing regulatory enquiries against the parent entity of a company whose IPO is imminent before giving the go-ahead if the parent entity is also listed.

Several companies have attempted to launch IPOs in the past, but their draft documents have not been approved by regulators due to pending or ongoing investigations. The National Stock Exchange (NSE) delayed its IPO plans while under scrutiny by the SEBI as part of the co-location scam probe.

Listing gains dip

Nearly 35 new companies have listed on the bourse since the start of this year, and most have seen their shares rise significantly on the day of debut. The most prominent example is Zomato, which saw its share price list at a premium of 51 per cent over its issue price.

Also read: Zomato founder is now among India’s ultrarich after a stellar IPO

Recently, however, there have also been some subdued listings, which may make investors more selective.

A cement manufacturing company owned by Nirma Group, Nuvoco Vistas Corporation, debuted on the bourses on Monday (23rd August, 2021) and fell below its issue price on the first day. On the BSE, the shares closed at Rs 531.30, lower than the issue price of Rs 570.

On Monday, CarTrade Tech’s NSE listing closed at Rs 1,575 per share. The company’s issue price was fixed at Rs 1,618.

Although this year has seen a number of profitable IPOs, market experts believe the trend can’t continue forever, and investors should examine the quality and valuation of each IPO before investing.

Also read: Sanjeev Bikhchandani’s investment in Zomato has grown to Rs. 15,000 Crores in 11 years