While The Sun Shines

Fast forward to the future. Of the current 52 Unicorns, ten are in e-commerce. Many of these business models were either ready or quickly scaled up as the pandemic made customer acquisition easy and cheap. Digital natives had business models that fit perfectly to address the changes brought about by the pandemic. They did not need to adapt, just scale. Artificial intelligence, changing consumer behaviour, expanding talent pool and access to capital helped ecommerce companies turn into Unicorns over an average of eight years. With e-behaviour here to stay, some of these startups – and we still call them that because they are very agile and adapt easily – need funding to grow further. Others have private equity investors who see the opportunity to exit their investments with handsome returns. What was slated to happen by 2025 is happening in 2021. The Indian market has had 26 new listings since the start of the year with over Rs 39,000 crore raised so far. The IPO market is buzzing with activity.

Why IPOs? Well, for starters, five to ten year fixed deposit rates were down from 8.5 per cent in 2014 to 5.4 per cent in May 2020 and hence, equities look quite attractive to anyone wanting to make their money work for them. Data substantiates the higher participation of first-time retail investors, including high net-worth individuals in the Indian markets. The total number of Demat accounts at the Central Depository Services (CDSL) and the National Securities Depository (NSDL) has touched six crore as of June 2021, up from four crore in February 2020. Alongside, the share of individual investors in the total turnover on the stock exchanges has gone up from 39 per cent in March 2020 to 45 per cent in March 2021. The financing of IPOs is booming. Add self-financing to this mix and they may well ensure spectacular listing gains.
Two, spectacular returns have buoyed sentiment further. India’s benchmark indices have more than doubled from the pandemic lows of March 2020. The BSE Sensex touched a high of 53,290.81 in July from a low of 25,639 in March 2020. Likewise, the NSE Nifty hit a whopping 15,962.25 in July 2021, from a low of 7,511 in March 2020.

The FII inflows contributed the most. They purchased a net Rs 2,49,119 crore of shares over the past 12 months. While they pared holdings in April and early May, buying by domestic institutional investors made up for the fall.

Domestic Mutual Funds have seen steady inflows from investors. AMFI data shows that the AUM of the MF industry has grown from Rs 6.73 trillion as on June 30, 2011 to Rs 33.67 trillion as on June 30, 2021! The Average Assets Under Management (AAUM) of MFs for the month of June 2021 was reported at Rs 34,10,403 crore.

Investors are not only subscribing to IPOs but also making money! The average number of retail investors subscribing to IPOs has almost tripled in the last few months. Over half the IPOs have given double-digit returns. Among the recently listed companies, four registered more than 100 per cent gains on debut – Chemcon Speciality Chemicals, Happiest Minds Technologies, Route Mobile, GR Infraprojects – and Clean Science & Technology almost hit a 100 per cent increase on listing.

While the economy bounces back and with Covid fears receding and vaccinations continuing at a steady pace, close to Rs 75,000 crore of IPO raise is already in the pipeline in 2021-22. Zomato, Paytm, Mobikwik, Car Trade, Glenmark Life Sciences, Shriram Properties and several others are in various stages of the IPO process. Both private equity investors and retail investors are making hay while the sun shines!