The year 2021 has been an auspicious one for investors. With nearly 50 more IPOs in the pipeline, this year might have the highest number of IPOs in the last 15 years. The impressive listing gains has lured companies to raise money from the public and make a name at Dalal Street. Equity gains have indeed outperformed the benchmark indices (Sensex and Nifty) since the last year, which is further creating an equity rush.
At least 30 companies are looking to collectively raise over Rs 45,000 crore through initial share sales. Technology-driven companies would receive a large portion of the total fundraising. The prominent companies in the pipeline during October-November are Policybazaar (Rs 6,017 crore), Emcure Pharmaceuticals (Rs 4,500 crore), Nykaa (Rs 4,000 crore), CMS Info Systems (Rs 2,000 crore) and MobiKwik Systems (Rs 1,900 crore).
Meanwhile, IPOs like Tatva Chintan Pharma, GR Infrastructure, Chemcon Specialty Chemicals, Happiest Minds Technologies, Route Mobile and Clean Science &Technology were listed last year. Since then, they have risen 100%, and this didn’t stop here. Some of them gave 2x-3x returns to the investors.
Reason Behind The Curiosity
Liquidity has been high in the stock market even during the pandemic, where everyone lost their jobs. There are several reasons behind this - one being that people sitting in their homes wanted to double their income. A massive number of people have opened their Demat accounts since last year. Data from SEBI stated that the number of new Demat accounts being opened between April 2020 and January 2021 was around 10.7 million. Another reason is foreign investors flocking to India, which further pushed retail investors into equity. FDI investment in equity increased by 19% to $59.64 billion in FY 20-21 as compared to $49.98 billion in FY19-20.
Stock market buzz during the pandemic held the attention of young investors. This desire also helped in the rapid growth of businesses while earning faster returns from the market.
What Are The Experts Saying?
Ajay Tyagi, SEBI Chairman, was quoted saying, “Growing number of unicorns in the startup ecosystem is a testimony of the new-age tech companies coming of age in our economy. These companies often follow a unique business model focusing more on rapid growth than immediate profitability”.
Meanwhile, Nikhil Kamath, founder of Zerodha, said if the bull run continues for the next 1-2 years, the IPO rush will continue. Moreover, the technology sector is expected to remain a major market driver. So far in 2021, 40 firms have issued initial public offerings, raising Rs 64,217 crore. He went on to say that IPOs are largely reliant on market cycles and that the IPO frenzy seen in the last 18 months is a result of the present bull cycle. Companies try to capitalise on investors' emotions.
What’s In-Store For The Future?
Such impressive fundraising was last seen in 2017, when nearly 40 companies had raised over Rs 64,000 crore through IPO. It seems that this record will be broken soon because, in the last 7 months, around 28 companies have already raised nearly Rs 42,000 crore. With the economy bouncing back and COVID-19 fears receding, the IPOs rush is expected to continue. The big firms are yet to enter the market. It is quite noticeable that investors are making profits while the sun is shining. This trend is likely to continue in the near future.
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