IPO market and SEBI

IPO market is not booming even after several SEBI exemptions, many companies avoid listing

The initial public offering (IPO) market is not booming, despite a number of exemptions from the Securities and Exchange Board of India (SEBI). Currently, many companies have dropped their listing plans in the market. According to investor bankers, the IPO market has come to a complete standstill and a similar situation is expected by the end of this year. Such is the case when some of the largest companies in the market have raised billions of dollars through IPOs.

SEBI had recently issued several exemptions

Last month, market regulator Sebi issued various exemptions in respect of IPOs. Those whose validity was to expire between March 1 and September 30 have been given an additional six months. SEBI's relief will benefit more than a dozen companies that had planned to raise about Rs 15,000 crore.Investor bankers have welcomed the move by SEBI. Many companies have postponed their IPO plans in view of the current market situation.

Tracks the secondary market IPO market

GB Jacob, head of equity capital markets at Edelweiss Financial Services, says the IPO market generally tracks the secondary market. Funds will continue to be raised through IPOs until the secondary market strengthens. According to Jacob, if a positive atmosphere emerges in the secondary market in the coming months, some companies may take advantage of SEBI's exemption to bring in an IPO.

Everything depends on the lockdown period

"Everything depends on how long the lockdown lasts in the country at the moment," says Pranab Haldia, MD, Prime Database. If business resumes by the end of May, companies will still take some time to enter the market. Investor bankers say the market valuation has come down significantly. So companies and promoters expect lower value than the application submitted last year. As a result, many companies and promoters are adopting a weighting strategy rather than selling at a lower valuation.

Only one company has had an IPO so far this year

According to investor bankers, the year 2020 could prove to be a perfect washout year for the IPO market. So far this year, only one company, SBI Cards and Payment Services, has had an IPO. The company's share price is currently trading 30% below the issue price. This has dampened the spirits of those who regularly invest in IPOs.  

These companies can get the benefit of 6 months discount    

Company	Approval Date	Issue Size (Rs. / Crore)
Shriram Properties	9 April 2019	1250
Emami Cement	15 May 2019	1000
Panna Cement	31 May 2019	1550
Pavrika	7 June 2019	800
Satyasai Pressure	21 June 2019	--
Annai Infra	12 July 2019	250
Angel Broking	26 July 2019	600
Bajaj Energy	30 August 2019	5450
Dark Steel	20 September 2019	500
Indian Renewable Energy	27 September 2019	750