India’s IPO market has crashed back to earth this year after a record 2021.
Surging inflation, looming higher interest rates, supply chain bottlenecks and the Ukraine war are among the factors that turned the boom into a bust.
Companies raised $15.4 billion (1.17 trillion rupees) last year, led by tech start-ups including Paytm, food delivery outfit Zomato, online insurance broker PolicyBazaar, and online fashion seller Nykaa. Though many were unprofitable, investors still flocked to buy their shares at sky-high valuations.
Those who held onto them have been pummelled. Thirty-three of the 63 companies that went public last year have slumped below their listing price. The biggest losers were online car trading platform CarTrade, which slumped 59%, and Paytm, down 55%.
“Investors can’t fathom the justification of the premiums that these companies charged at the time of their IPOs,’’ said Arun Kejriwal, director of advisory firm Kejriwal Research & Investment Services in Mumbai. “They’re abandoning these stocks.”
That’s bad news for companies that planned listings this year. These include fintech start-up Mobikwik, Oyo Hotels and Homes, and Delhi-based logistics services player, Delhivery
With 55 companies approved by the Securities and Exchange Board of India to raise almost $20 billion, and another 50 companies waiting for approval to raise another $12 billion, the pipeline is though still bulging.
A monster $9.21 billion listing by Life Insurance Corporation of India may launch as early as this month and will be the nation’s biggest-ever fundraising.
Many companies are, though, delaying their listing plans and rethinking valuations from the sky-high levels of last year.
- By Indrajit Basu
This story was updated on April 14 to correct the numbers in the third paragraph.