An initial public offering (IPO) enables a private company to go public by selling a portion its stocks to the general public for the first time. In this manner it gets listed on a bourse.
Fiscal year 2018, which ended on March 30 this year, saw a spate of such IPOs in India that cumulatively fetched around Rs.84, 357 crore.
To put it in some perspective: IPOs in the previous fiscal of 2016-17 raised just about one third of what they did in the just concluded fiscal year. According to figures released on PRIME Database, the figure stood at Rs.24, 618 crore in 2016-17 fiscal. And in 2007-08, considered the best year ever for the IPO, the total amount raked in by IPOs, was just half – about Rs.41, 323 crore – of the last fiscal.
In fact, according to a report by IIFL, nearly 190 companies (including SMEs) debuted in the stock market this year to raise equity capital.
To understand the IPO scene better, we categorise them under various parameters:
Big ticket launches
Some of the biggest share sale was by insurance companies, with state-owned General Insurance Corporation (GIC) of India leading the pack. GIC’s offering, for instance, was to the tune of Rs.11, 257 crore. After hitting the market, it traded at a discount of 5 per cent on its issue price of Rs.912.
New India Assurance and SBI Life Insurance were other large sized offerings of public insurance companies. Some of their private sector counterparts were HDFC Standard Life’ scrip that ended at a premium of 19 per cent over its issue price and ICICI Lombard that ended at a premium of just 3 percent over its issue price.
Other big offerings spanning both the private and public sector were IRB InvIT Fund, India Grid Trust, AU Small Finance and Hindustan Aeronautics Limited, among others.
Foremost among them are steel fabrication and infrastructure solutions company Salasar Techno Engineering, with an offering size of Rs.36 crore that got oversubscribed almost 270 times. Other runaway hits have been Astron Paper & Board Mill (oversubscribed 241 times), Apollo Micro Systems, Dixon Technologies (oversubscribed 117.83 times), AU Small Finance Bank (oversubscribed 54 times), Shankara Building Products (oversubscribed 200 times), Dixon Technologies, CDSL (oversubscribed 170 times), Apex Frozen Foods (oversubscribed 6.14 times), PSP Projects and others.
They have earned good returns for their investors ranging from 6 percent to 270 percent.
State-owned companies dominated the primary markets in the year, accounting for over one-third of the total Rs 81,610 crore raised. It all started with the stellar listing of state-owned “Miniratna” firm Hudco which provides loans for housing and also loans for urban infrastructure projects. The disinvestment of 10.19 percent in the PSU saw bids of almost Rs.97, 000 crore after getting oversubscribed almost 80 times. It marked the highest oversubscription in any PSU disinvestment. Its scrip traded higher by 21.5 percent at Rs.73.55 (its issue price was Rs.60) after hitting the market.
However, most state-owned companies failed to generate enough investor interest. Around half the amount raised by government companies has been provided by LIC. GIC, New India Assurance and Hindustan Aeronautics Limited have had to be bailed out big time by the fellow state-backed insurer.