IPOs dry up in anticipation of election outcome

The number of new firms listed on the Indian markets is staring at a 9-year low, with an annual decline of close to 60%, on the back of uncertainty over the outcome of general elections.

According to the data available with the Bombay Stock Exchange (BSE), the stock markets witnessed only 79 new listings in the first 11 months of the current financial year. This is a drop of 59.5% from 194 listings in the corresponding period of 2017-18. For the full year, last year, the markets saw 213 new listings.

Prior to that markets had seen 242 listings in 2016-17, 311 each in 2015-16, and 2014-15 and 147 in 2013-14. The last time when the new listings in markets were at such a low was way back in 2009-2010. In the immediate aftermath of the global recession, the Indian markets had tanked sharply and only 75 new securities got listed in the entire year.

"Listings are dependent on the scenario in the markets -- if the markets are good the listing would be good.... The markets have been bad and unstable this year and there is also a very limited demand of investors parking money into the markets. And in the election year, people tend to put lesser money into the markets -- that is the sentimental value," an analyst with market advisory firm Motilal Oswal said.

On the other hand, the markets have seen 122 securities getting delisted during the year. Before the current financial year, 418 stocks were delisted in 2017-18, 319 in 2016-17 and 24 in 2015-16.

According to estimates, there are about 5,000 companies that are listed in India as of the date.

The follow-on public offers (FPOs) have also dried from the markets during 2018-19, and are starting to dry up from the Indian markets. In the first 11 months of the current financial year, there were 983 FPOs -- a drop of 52% from 2,065 FPOs in the corresponding period last year.

The last time the country had seen such a low number of FPOs was way back in 2003-2004 when only 593 existing companies had gone for FPOs. Given that the current financial year will end in a month, analysts tracking the markets suggest that there will not be much increase in the number of IPOs during the year.