The Indian primary market is expected to remain hectic in the new year, with a bunch of companies such as Adani Wilmar, Global Hospitals (Medanta) and Emcure Pharma likely to launch their initial public offerings (IPOs) in the month of January.
Other companies such as skin care company VLCC, ventilator maker Skanray Technologies, stent maker Sahajanand Medical Technologies, Healthium Medtech, AGS Transact ESDS Software, Traxcn Technologies and CMR Green Technology are also expected to launch their IPOs in January, said multiple people aware of the development.
The continued activity in the primary markets comes even as the number of omicron cases are rising fast in India, while global macro headwinds such as rate hikes by central banks and FII flows into Indian markets continue to remain a concern for Indian stock markets.
Securities and Exchange Board of India’s (SEBI) recent move to tighten the rules for the primary market are aimed at tackling regulatory gaps and extreme stock price volatility on their trading debut, after a record year for IPOs that saw Indian companies raise ₹1.19 trillion, are also expected to impact primary market sentiment once they come into force.
The new rules address how companies set IPO price bands, when anchor investors can sell their shares, disclosures about how the company can spend share sale proceeds, and how much large shareholders can sell on listing day.
According to industry experts, these changes could have a significant impact on the IPO pipeline, which currently has IPOs worth over Rs1 trillion.
"These amendments are mainly a reaction to several IPOs earlier this year, and follow after consultation papers issued by SEBI. These proposed changes to the law could have long term impact. The regulator could have prescribed additional and more detailed continuous disclosures and monitoring keeping in mind existing requirements including, shareholder approval for proposed acquisitions. These changes may impact plans of issuers planning to list on Indian stock exchanges," said Yash Ashar, Partner & Head - Capital Markets, Cyril Amarchand Mangaldas
Makarand Joshi, founding partner of MMJC and Associates LLP, a corporate compliance firm, said that the allotment of shares in IPOs on lottery basis to HNI/ NII and not on proportionate basis (as was the practice earlier) will deter HNIs and NIIs from applying in large amounts and thereby bring down the over-subscription rates of the IPOs going forward.
"Further, the bifurcation of this category between Rs 2-10 lakhs and Rs 10 lakhs and above, with the first category gaining one-third share of HNI/ NII category will also bring down the over subscription rate of IPOs," said Joshi.