India’s primary market is heading for an unusually crowded day, with six mainboard IPOs set to open for subscription on September 9. It is the first time in three decades that exactly six IPOs are scheduled to open on a single day, highlighting the strong appetite among companies to tap the equity market and investors’ continuing interest in new listings.
The six issues are expected to raise a combined ₹4,386 crore. In comparison, six IPOs that opened on a single day about 30 years ago raised just ₹22 crore. The last time exactly six IPOs opened on one day was October 14, 1996. Seven IPOs had opened on October 28 that year.
The rush is not limited to Wednesday. As many as 12 mainboard IPOs are scheduled to open this week, with companies collectively looking to raise around ₹7,180 crore.
The six companies tapping the market on Wednesday are:
Rentomojo
Asset Reconstruction Company (India) or ARCIL
Manipal Payment & Identity Solutions
Steamhouse India
LCC Projects
Karamtara Engineering
The unusually heavy IPO calendar comes as the primary market has regained momentum, with companies seeking to take advantage of favourable investor sentiment before market conditions change.
The continued flow of money into mutual funds is one of the key factors supporting the primary market. Mutual funds are receiving substantial inflows every month, creating a need for fresh investment opportunities. With companies able to assess investor appetite during roadshows, weak demand or concerns over valuations can also prompt them to postpone an issue or adjust pricing before launch.
This suggests that the current IPO pipeline is not simply being driven by companies wanting to raise money; there is also sufficient investor demand to absorb new offerings.
The strong appetite for IPOs, however, may be diverting some funds away from the secondary market, analysts say. Foreign portfolio investors (FPIs), too, have been shifting money from the secondary market towards the primary market.
The attraction is partly linked to the listing gains seen in several recent IPOs. Some recently listed companies, including Milky Mist, ESDS Software and Tempsens Instruments, have more than doubled from their IPO prices.
However, such gains may not always last. Several newly listed stocks tend to correct sharply after two or three months, making short-term listing gains an unreliable investment strategy.
The current IPO rush is also being driven by the cyclical nature of the primary market. Companies and existing shareholders may be keen to capitalise on the current window before market sentiment changes.
A notable feature of the present IPO pipeline is the large share of funds being raised through offers for sale (OFS). In such cases, existing shareholders or promoters sell their holdings rather than the company receiving all the proceeds for expansion.
For example, ARCIL’s ₹733 crore issue is entirely an OFS, while ₹485 crore of Manipal Payment & Identity Solutions’ ₹805 crore issue is also through an OFS. The OFS component allows existing investors to monetise their holdings at valuations they may not get later.
A crowded IPO calendar gives investors more choices, but it also makes selectivity important.
Investors should not assume that strong subscription demand or a potential listing gain automatically makes an IPO attractive. The company’s business model, profitability, valuation, debt levels, growth prospects and the proportion of fresh issue versus OFS need to be assessed before investing.
With the NSE IPO also expected later in September, the primary market could remain busy in the coming weeks. For investors, the key question is not how many IPOs are opening, but which ones offer reasonable valuations and sustainable long-term growth.
