Covid-19 freezes India’s IPO market

New listings have drastically come down during the current financial year as the coronavirus pandemic and the resultant economic mess have made the equity markets unattractive for companies wanting to raise capital.

All the stock exchanges in India have seen just 19 initial public offerings (IPOs) in four months of the current fiscal, a drop of 62% from the corresponding numbers last year, according to data available with the Bombay Stock Exchange (BSE). In the first four months of FY20, the country had seen 50 new listings.

The IPO market in India was already seeing a massive downturn before the pandemic due to a prolonged slowdown and a threat to financial stability. It was only in 2019-20, that the new listings rose to 146 in a year.

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For the three consecutive years till FY19, the number of IPOs had declined, touching a six-year low of 116 new listings.

However, the pandemic has again worsened the situation in the market. The first mainboard IPO of the year happened recently when Rossari Biotech’s IPO was over-subscribed 79 times.

Similarly, in the case of follow-on public offers (FPOs), the country has seen 478 FPOs this year, till now -- a drop of 28% from 660 FPOs in the corresponding period last year. Recently capital-starved YES Bank saw its FPO undersubscribed, primarily because of bleak response from the retail investors.

“Other than a handful of companies driving indices, the rest are in extended doldrums bracing for the post moratorium impact. At these valuations, most would be hesitant to raise equity especially with cheaper debt available to good companies,” said Anubhav Srivastava, Partner, Infinity Alternatives.

The corporate bonds alone made up a whopping Rs 32.54 lakh crore India Inc’s debt at the end of the March quarter.