Back on track: IPO mkt recovers

-
NEW DELHI: The recent decision of the Securities and Exchange Board of India (SEBI) to cut the timeline for rights issues and change the pricing rules will enable India to improve its ratings in the global IPO market, industry players feel. SEBI recently reduced the duration for a rights issue from 109 days to 43 days.

India was in the fifth position in the global IPO market, raising around $4.3-billion from 32 deals so far this year. The only other Asian country in the top five is China, which came second, raising $15.6 billion from 94 IPOs, according the media.

The ranking indicates that India's IPO market has managed to recover after some companies such as Wockhardt Hospitals and Emaar MGF pulled out their public offerings due to inadequate response. Global IPO volumes have dipped by 51.3% so far this year, reaching around $87-billion from 403 issues.

The United States tops the global IPO list, with Saudi Arabia and Brazil at the third and fourth spot, respectively. This year, the Dalal Street is expected to see 55 more IPOs, which may raise around $18 billion. Around 118 follow-on public offers (FPO) are also expected, raising proceeds around $17-billion. Analysts believe investment bankers' ability to raise money even in the volatile market will boost companies tapping the market.

"From a regulatory standpoint, the two decisions that Sebi has made with respect to minimum price for QIP and shortening the rights issue timeline are progressive. These will help issuance in current volatile markets and may further heighten the activity in the equity capital market. The industry is now looking forward to pricing relaxation for ADR, GDR and FCCBs. Increasing the validity period for SEBIcomments from existing three months will also help the IPOs of unlisted companies," said Sanjay Sharma, MD, Deutsche Equities India.

The biggest IPO that may hit the Indian market this year could be GIFTCL raising around $ 2 billion, followed by ICICI Venture with $1.5 billion. While there may be follow-on offers (FPO) from companies such as Essar Oil, Ranbaxy, Suzlon Energy, Hindalco Industries and Tata Motors, raising nearly $7 billion. "Due to volatility, companies are not sure when their issue hits the market. The new guidelines will provide them some sense of security and it cannot be ruled out that we may see more companies coming out with initial or follow-on offers," said Sunil Sinha, senior economist at Crisil.

Popular posts from this blog

IOB capitalises on hike in stake by LIC

-
Indian Overseas Bank rose 1.53% to Rs 46.45 at 10:31 IST on BSE, after the biggest domestic instutional investors Life Insurance Corporation of India hiked its stake in the state-run bank. The bank made this announcement after trading hours on Wednesday, 25 March 2009. Meanwhile, the BSE Sensex was up 126.19 points, or 1.31%, to 9,794.09. On BSE, 31,003 shares were traded in the counter. The stock had an average daily volume of 1.93 lakh shares in the past one quarter. The stock hit a high of Rs 47 and a low of Rs 45.95 so far during the day. The stock hit a 52-week high of Rs 156.80 on 2 May 2008 and a 52-week low of Rs 37.55 on 9 March 2009. The mid-cap bank stock had underperformed the market over the past one month till 25 March 2009, falling 3.17% as compared to the Sensex's 8.60% rise. It had also underperformed the market in the past one quarter, declining 33.94% as compared to the Sensex's 1.04% rise. The bank's current equ The current price of ...
Read more

Lok Housing & Constructions builds on fund raising plans

-
Lok Housing & Constructions jumped 6.99% to Rs 107.90 at 11:20 IST on BSE ahead of a board meeting to consider fund raising options from both foreign and local market, including an institutional placement. Meanwhile, the BSE Sensex was down 50.50 points, or 0.30%, at 15203.73. On BSE, 1.86 lakh shares were traded in the counter. The scrip had an average daily volume of 4.74 lakh shares in the past one quarter. The stock hit a high of Rs 115 and a low of Rs 102 so far during the day. The stock had a 52-week high of Rs 390.50 on 1 January 2008 and a 52-week low of Rs 96.25 on 12 June 2008. The scrip had underperformed the market over the past one month till 12 June 2008, falling 26.55% compared to the Sensex's 10.18% decline. It had also underperformed the market in the past one quarter, falling 31.39% compared to Sensex's 3.24% fall. The small-cap housing projects developer has an equity capital of Rs 42.88 crore. Face value per share is Rs 10. The current...
Read more

economic times picks

-
CMP: Rs 70.50 Target Price: Rs 90 CLSA Asia-Pacific Markets maintains an 'outperform' on Jagran Prakashan, with a 12-month price target of Rs 90. "An economic slowdown notwithstanding, improving literacy and income levels in Hindi heartland imply that drivers for Jagran's growth are still in place. With a 35% ad rate hike in 2008, Jagran continues to narrow the gap with its more expensive English rivals," the foreign brokerage said in a client note, after a Q&A reply from the management. "Rising newsprint prices have made Jagran cautious on launching new editions in FY09 and its focus this year will be profitability. While management has budgeted for a minor increase in FY10 newsprint prices, it believes that prices are likely to peak in Q2FY08 and decline thereon," it added. Neyveli Lignite CMP: Rs 117.15 Target Price: Rs 160 MERRILL Lynch has maintained its 'neutral' rating on Neyveli Lignite, with a price target of Rs 160 ...
Read more