IPO market likely to remain hot in December as 3-4 public issues may hit the Street

After the SBI Card IPO in early March, the primary market sentiment took a hit due to the outbreak of coronavirus and subsequent impact on economic activities and the secondary market.

Benchmark indices crashed 25 percent each in March from January highs.

Rossari Biotech, which tested the waters in the primary market with its IPO in July, had to cancel its press conference due to COVID implications. The public issue though received an overwhelming response from investors.

The public issues of Happiest Minds Technologies, Route Mobile and Mazagon Dock Shipbuilders also saw spiked interest from investors and gave handsome returns on listing.

As secondary market started to pick up pace, the interest in primary market also gained. By the time Rossari Biotech launched its IPO, the benchmark indices had already recovered more than 45 percent each from March 23's low.

By November, Nifty and Sensex have rallied 70 percent each from March lows backed majorly by foreign fund inflows amid rising hope for strong economic recovery and earnings growth in India.

Foreign investors invested a record amount of Rs 55,577 crore in a single month in November, taking total inflow to Rs 96,766 crore in 2020.

In 2020 so far, 13 companies have (including Mindspace Business Parks REIT) launched their IPOs and have raised Rs 29,477 crore.

After a strong listing of Gland Pharma, which rallied 41 percent from its issue price in November despite tepid response to IPO, at least 3-4 companies are expected to launch their IPOs in December.

"Due to buoyed market sentiment in October–November 2020, SEBI approved unlisted companies are ready to tap the investors interest in IPO after witnessing successful listing in Hyderabad-based Gland Pharma. To tap the investors' mood, a few dozen of companies wish to grab market sentiment companies such as Kalyan Jewellers, Suryoday Small Finance Bank, ESAF Small Finance Bank, Nazara Technologies, Burger King, Antony Waste Handling Cell and RailTel Corporation of India are in line to launch IPO in Dec 2020," Prashanth Tapse, AVP Research at Mehta Equities told Moneycontrol.

But he feels Burger King India, Kalyan Jewellers, Nazara Technologies and RailTel Corporation can only be prospective IPOs in December and not all.

If the expected IPOs actually launch in December, the number of IPOs in 2020 could be similar to 2019 when there were 16 main board IPOs.

"Sensex and Nifty touched all-time high and trading above pre-coronavirus level. So, this is the right time to bring an IPO in the market which would provide better valuation. Going forward, we expect a new IPO in the market," Amarjeet Maurya, AVP - Mid Caps at Angel Broking said.

Currently as per the Sebi, expected IPO list included Kalyan Jewellers, Saryoday Small Finance Bank, ESAF Small Finance Bank, Nazara Technologies, Burger King, RailTel Corporation, Sigachi Industries, Heranba Industries, Antony Waste Handling Cell, Mrs. Bectors Food Specialities, Indigo Paints, Nureca and Stove Kraft.

The strong momentum seen for last few months is expected to continue in the coming year too, though there could be some consolidation in near term. Hence, the primary market is also likely to reflect the strong momentum and as a result, big and quality IPOs are expected to launch their IPOs in coming year, experts feel.

"We believe Indian stock market rally to continue its movement in 2021 and the primary market will also mirror the same story. Looking ahead, continued improvements in global risk appetite and expected improvement in domestic economic activity reflecting a rise in GDP growth will further boost Indian equities to perform well," Prashanth Tapse said.

He feels other names which are highly awaited by investors are LIC, NSE, NCDEX, Zomato, Aditya Birla Mutual Fund, IRFC, Stove Kraft, Century Metal Recycling, Bajaj Energy, Samhi Hotels, HDB Financial Services, Home First Finance, Apeejay Surrendra Park Hotels, which can be in the pipeline for next 6-12 months.