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September sees highest number of IPOs in last 30 months

In September 2020, eight companies raised more than Rs 7,100 crore, much less than the Rs 15,711 crore garnered by eight firms in March 2018

Ten companies have launched their IPOs since July and many more are in the pipeline. September has been particularly busy with eight companies opening their public issues during the month.

Happiest Minds Technologies, Route Mobile, Chemcon Speciality Chemicals, Computer Age Management Services, Angel Broking, UTI Asset Management Company, Mazagon Dock Shipbuilders and Likhitha Infrastructure launched their initial public offers during September 2020.

The last time eight companies hit the Street with IPOs was in March 2018.

In March 2018, eight companies - Bharat Dynamics, Bandhan Bank, Hindustan Aeronautics, Sandhar Technologies, Karda Construction, Mishra Dhatu Nigam, ICICI Securities and Lemon Tree Hotels - had come out with initial public offerings.

In September 2020, eight companies raised more than Rs 7,100 crore, much less than the Rs 15,711 crore garnered by eight firms in March 2018.



"Initial Public Offerings (IPOs) witnessed renewed interest from retail as well as other investors owing to a variety of reasons. Since the onset of the coronavirus pandemic and vicious stock market correction in March 2020, volatility has trended down and attracted many new investors," Gopal Kavalireddi, Head of Research at FYERS told Moneycontrol.

Close to 6 million demat accounts were opened in the last 9 months, taking the retail tally to 44.6 million accounts.

"During this phase, strong leadership and niche businesses, whose peers continue to enjoy good valuations, decided to take advantage of the prevailing environment and tap into primary markets," Kavalireddi said.

In September 2020, there was one government company, Mazagon Dock Shipbuilders, which launched its IPO, while in March 2018, there were three government companies that raised money via an IPO.

But there is one area where September 2020 IPOs overtake March 2018 IPOs. It is the subscription numbers. Majority of IPOs' subscription figures in 2018 were in single digits, barring Bandhan Bank (14.56 times).

In September 2020, Happiest Minds Technologies witnessed subscription of 151 times, Chemcon Speciality Chemicals 149.3 times, Mazagon Dock Shipbuilders 157.4 times (though it closed on October 1 but opened on September 29), Route Mobile 73.3 times, CAMS 47 times, Likhitha Infrastructure 8.4 times, Angel Broking 3.94 times and UTI AMC 2.3 times.

Experts expect the momentum in the primary market  to continue, as they feel LIC is also planning to launch its IPO by year-end, which is expected to be the biggest in the history of India.

"With the buoyancy in equity markets we have seen a number of companies lining up for IPOs (including some large upcoming IPOs), and we could continue to see more, if market conditions remain favourable. We have also seen some existing large companies going in for equity capital raising to strengthen their balance sheets and provide liquidity buffer to help deal with the COVID pandemic and growth slowdown," Sampath Reddy, Chief Investment Officer at Bajaj Allianz Life told Moneycontrol.

The government has also stepped up its PSU strategic disinvestment drive, which had been announced last year to help deal with the sharp fall in revenue collections (as a result of the slowdown), he said.

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