IPO collections till September-end were almost twice that of 2019, which could be the best year on record in the last decade
It’s been almost 100 years since economist John Maynard Keynes used the term ‘animal spirit’ to describe a spontaneous urge to action rather than inaction. Irrational market behaviour hasn't matured much since then. The mad rush in the IPO mart is a grim reminder of how action is still dictated by spontaneous optimism rather than mathematical expectations. Read this and more in this weekend’s edition of Long & Short of Markets.
Investment bankers, promoters and private equity funds are rubbing their hands in glee as 2020’s stunning equity rally that pushed stocks to record highs has further brightened the prospects of India’s booming market for initial public offers.
In the fattened pipeline are the likes of Kalyan Jewellers, commodities exchange NCDEX, RailTel, Indian Railway Finance Corporation and Barbeque Nation, just to name a few among the 2-odd dozen players wanting to raise money in fresh equity sales.
By all accounts, 2020 was a year of contrasts: investors buffeted through a pandemic-induced bear market, a V-shaped recovery in stock prices, an economic recession and a turbulent political slugfest all in a space of 9 months. Even as stocks get roiled in the penultimate week of 2020, the benchmark 50-share Nifty is still up a respectable 8% year-to-date; and from its March lows, the recovery is a stunning 78%.
Food chain, Burger King, tech stock Happiest Minds and telecom back-end provider Route Mobile were among 13 immensely successful IPOs that have raised Rs 26,184 crore so far this year, the highest amount since 2018. Investors who were lucky to get even a few shares allotted to their demat accounts laughed their way to the bank.
This madness alone resulted in Burger King’s stunning debut of Rs 112, an 88 percent premium. Lekin abhi picture baaki thi! Such was the frenzy for Burger King’s shares that the stock hit 3 successive 20 percent circuits and then another 10 percent uptick at Rs 213 over four sessions. It’s cooled off a bit now, but demand is unabated.
The story was no different for Happiest Minds – floated by serial tech entrepreneur, Ashok Soota. Priced at Rs 166 a share, it listed at 120 percent premium after getting offers that were 150 times more than its issue size of Rs 702 crore.
It’s the second time in 10 months for Anthony Waste Handling to test the IPO waters. The company, which collects solid waste for city municipalities, has an IPO worth Rs 300 crore open for subscription at Rs 313-315 a share at a time when bullish sentiment seems to have tapered.