As Mahindra Holidays’ success inspires more companies to hit the primary market, investors too are fastening their seat belts for a joy ride, says Deepak R. Patra
The brave one wins! And it’s proven once again with the Initial Public Offer (IPO) of Mahindra Holidays and Resorts India Ltd. Strangled by the year long carnage at Dalal Street when the primary market was left high and dry, it came as the first IPO of the financial year 2009-10 breaking a four-month lull. Though market was stirred by the post election developments, no body was sure about the IPOs future; many questions were passing through the minds. While analysts were thinking over the possibilities of the IPO getting fully subscribed, investors were cautiously thinking whether to invest or not? But then, Mahindra Holidays’ bravery paid off. It ended up being almost 10 times over subscribed. However, this success of Mahindra Holidays has given rise to a million dollar question; is the primary market reviving thick and fast??
“Well, it’s a tough question to answer at this point of time,” says Prithvi Haldea, Founder-Managing Director, PRIME. Certainly, considering it’s just the first of the lot, it’s tough to predict the future outcomes, but the question remains, why did the company pick up this time to hit the market? “In September 2008 we had filed the draft prospectus with the Securities and Exchange Board of India (SEBI) and were waiting for the right time.
Post-election we could see a window of opportunity and just decided to cash on it,” explains Ramesh Ramanathan, MD, Mahindra Holidays’ and Resorts India Ltd. However, the company derived courage to launch the IPO from its stronger fundamentals and business model based on both growth and annuity. And of course, their past experience as Ramanathan further adds, “As such we are not completely new in the primary market. Earlier we had successfully accomplished Tech Mahindra IPO.”
Whatever may be the reason, but this IPO has seen the primary market revive for sure. More for the fact that with the launch of the IPO the grey market in Ahmedabad, which in general is considered as a litmus test for IPOs, has witnessed some movements almost after a year. Market men feel that the movements will start gathering momentum as new IPOs come in. Even though investors are still very cautious about investing, one cannot deny the fact that gradually now they are coming out of their shells. At least, the Qualified Institutional Buyers (QIBs) seem to be returning to the market. In Mahindra holidays’ IPO, the QIB portion was over subscribed by almost 13 times (bids received for 71,303,160 shares as against an offer of 5,559,165 shares), the highest among all the categories. Active participation of the QIBs certainly means that things will turn for good from here on.
Perhaps corporate India too is banking on the same fact. As many as 19 companies have already filed their Draft Red Herring Prospectus (DRHP) with the market regulator SEBI and are raring to hit the market soon. This includes a few big ticket IPOs too like NHPC Ltd. (issue size Rs.2500 crore), Adani Power Ltd. (Rs.2200 crore) and Oil India Ltd. (Rs.1400 crore). Combined together 19 companies, which have received a nod from SEBI, will be raising a whopping Rs.8900 crore from the market. But then that’s not all, while near about 20 applications are pending with SEBI for approval, many more like BSNL, Pradip Overseas, John Energy et al are evaluating their options to float IPOs, which seriously means the draught is set to be over as a new season of IPOs have just kick started with that of the Mahindra Holidays’. However, as per Prithvi Haldea, “Companies will remain cautious for sure as issue expenses with a failed IPO is too big a cost.”
Meanwhile, the investor community seem to be gearing up for the show. As per the data available with National Securities Depository Ltd. (NSDL) and Central Depository Services Ltd. (CDSL) during April and May nearly 1.84 lakh new demat accounts have been opened. And the momentum is picking up fast indicating that investors too are prepared to participate in the upcoming IPOs. But then, both parties must not forget, fundamentals will be the key for both parties.
Deepak R. Patra
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The brave one wins! And it’s proven once again with the Initial Public Offer (IPO) of Mahindra Holidays and Resorts India Ltd. Strangled by the year long carnage at Dalal Street when the primary market was left high and dry, it came as the first IPO of the financial year 2009-10 breaking a four-month lull. Though market was stirred by the post election developments, no body was sure about the IPOs future; many questions were passing through the minds. While analysts were thinking over the possibilities of the IPO getting fully subscribed, investors were cautiously thinking whether to invest or not? But then, Mahindra Holidays’ bravery paid off. It ended up being almost 10 times over subscribed. However, this success of Mahindra Holidays has given rise to a million dollar question; is the primary market reviving thick and fast??
“Well, it’s a tough question to answer at this point of time,” says Prithvi Haldea, Founder-Managing Director, PRIME. Certainly, considering it’s just the first of the lot, it’s tough to predict the future outcomes, but the question remains, why did the company pick up this time to hit the market? “In September 2008 we had filed the draft prospectus with the Securities and Exchange Board of India (SEBI) and were waiting for the right time.
Post-election we could see a window of opportunity and just decided to cash on it,” explains Ramesh Ramanathan, MD, Mahindra Holidays’ and Resorts India Ltd. However, the company derived courage to launch the IPO from its stronger fundamentals and business model based on both growth and annuity. And of course, their past experience as Ramanathan further adds, “As such we are not completely new in the primary market. Earlier we had successfully accomplished Tech Mahindra IPO.”
Whatever may be the reason, but this IPO has seen the primary market revive for sure. More for the fact that with the launch of the IPO the grey market in Ahmedabad, which in general is considered as a litmus test for IPOs, has witnessed some movements almost after a year. Market men feel that the movements will start gathering momentum as new IPOs come in. Even though investors are still very cautious about investing, one cannot deny the fact that gradually now they are coming out of their shells. At least, the Qualified Institutional Buyers (QIBs) seem to be returning to the market. In Mahindra holidays’ IPO, the QIB portion was over subscribed by almost 13 times (bids received for 71,303,160 shares as against an offer of 5,559,165 shares), the highest among all the categories. Active participation of the QIBs certainly means that things will turn for good from here on.
Perhaps corporate India too is banking on the same fact. As many as 19 companies have already filed their Draft Red Herring Prospectus (DRHP) with the market regulator SEBI and are raring to hit the market soon. This includes a few big ticket IPOs too like NHPC Ltd. (issue size Rs.2500 crore), Adani Power Ltd. (Rs.2200 crore) and Oil India Ltd. (Rs.1400 crore). Combined together 19 companies, which have received a nod from SEBI, will be raising a whopping Rs.8900 crore from the market. But then that’s not all, while near about 20 applications are pending with SEBI for approval, many more like BSNL, Pradip Overseas, John Energy et al are evaluating their options to float IPOs, which seriously means the draught is set to be over as a new season of IPOs have just kick started with that of the Mahindra Holidays’. However, as per Prithvi Haldea, “Companies will remain cautious for sure as issue expenses with a failed IPO is too big a cost.”
Meanwhile, the investor community seem to be gearing up for the show. As per the data available with National Securities Depository Ltd. (NSDL) and Central Depository Services Ltd. (CDSL) during April and May nearly 1.84 lakh new demat accounts have been opened. And the momentum is picking up fast indicating that investors too are prepared to participate in the upcoming IPOs. But then, both parties must not forget, fundamentals will be the key for both parties.
Deepak R. Patra
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM fights meltdown, places 2300 students By Education Mail Bureau
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Event at IIPM
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IIPM Admission Detail
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IIPM, GURGAON
