The second half of 2022 will be another restrained duration for equity capital markets, particularly for initial public offerings (IPOs) with a volatile stock market being one of the various macroeconomic headwinds, experts said. General fundraising in the equity capital markets declined to ₹1.01 trillion in the initial half of the calendar year 2022, correlated to the fundraising of ₹1.26 trillion in the exact period the previous year, concerning the data from the primary markets tracker Prime Database.
This comprises fundraising across IPOs, entitled institutional placements (QIP), rights issues, InvITs, REITs, and preferential allotments.H1 2022 recorded elevated fundraising in areas such as IPOs (₹40,311 crores in H1 2022 correlated with ₹27,418 crores in H1 2021) and preferential allotments (₹45,726 crores in H1 2022 correlated with ₹36,610 crores in H1 2021) because of one-off huge deals such as the ₹21,000 crore primary share sale of Life Insurance Corp of India and around ₹15,400 crores put forward by three Adani group companies in preferential allowances. Regardless, there wasn’t much fundraising for most additional products such as QIPs, rights and InvITs/REITs.
Industry professionals speculate that while some companies will be able to tap the markets despite the unstable conditions, the all-around activity will be silenced, particularly for IPOs. “IPO activity will be silenced. Fairly new sectors will behold more interest. It is truly a consumer’s market and hence the needed valuation goals will have to be strengthened,” said Venkatraghavan S, managing director and head, of equity capital markets, at Equirus Capital.
” For instance, as far as regions move, Indian IPOs will not observe any imprudent binary circumstances like Good-No Good. The understanding of the last year implies that investors will look at profitability/visibility of profits, in addition to expansion; thus, even tech / new age stocks could be in play. The normal suspects such as customers and pharma will see further traction than others,” Venkatraghavan asserted. The IPO window may open up after September for promising quality companies, according to Abhijit Tare, managing director and chief executive officer, of Motilal Oswal Investment Advisors.
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