Primary Markets

Published: Dec 29, 2021
Updated: Dec 29, 2021

Boomtime Ahead: IT Cocks Snook At Pandemic

Despite the entire financial year 2020-21 being overshadowed by the pandemic, Indian corporates raised an all-time high amount of Rs 1,88,900 crore through the public equity markets. This was more than double the Rs 91,670 crore that was raised in 2019-20, according to Pranav Haldea, Managing Director, PRIME Database Group, India’s premier database on the capital markets. The previous highest amount raised in a financial year was Rs 1,75,680 crore in 2017-18.

Strong retail participation in IPOs, huge listing gains and the highest-ever amount raised through QIPs and InvITs/ReITs were the key highlights of the year.

Mainboard IPOs: According to Haldea, contrary to the despondency due to the pandemic, 30 mainboard IPOs came to the market collectively raising Rs. 31,268# crore. This was an increase of 54 per cent from the Rs 20,350 crore raised through 13 IPOs in 2019-20. The largest IPO in 2020-21 was from Gland Pharma for Rs 6,480 crore. The average deal size was Rs 1,042 crore.

The overall response from the public to the mainboard IPOs of the year, according to primedatabase.com, was very good. 18 IPOs received a mega response of more than 10 times while 4 IPOs were oversubscribed by more than 3 times and the balance 8 IPOs were oversubscribed between 1 and 3 times. As far as retail investors are concerned, the year witnessed a tremendous response from them. The highest number of applications was received by Indigo Paints (25.88 lakh) followed by Mtar Technologies (25.87 lakh) and Mazagon Dock (23.56 lakh).

According to Haldea, the response to IPOs was further buoyed by the strong listing performance of IPOs of the year. Of the 28 IPOs which got listed, 19 gave a return of over 10 per cent (based on the closing price on the listing date). Burger King gave a stupendous return of 131 per cent followed by Happiest Minds Technologies (123 per cent) and Indigo Paints (109 per cent). Moreover, 18 of the 28 IPOs (listed thus far) are trading above the issue price (closing price of March 26, 2021). The IPO pipeline continues to remain strong, with 18 companies holding SEBI approval proposing to raise nearly Rs 18,000 crore and another 14 companies awaiting SEBI approval to raise nearly Rs 23,000 crore.

SME IPOs: Activity in this segment further declined in 2020-21 in comparison to 2019-20; there were only 28 SME IPOs, which collected a total of Rs 243@ crore in comparison to 45 IPOs in 2019-20 which collected Rs 436 crore.

OFS (SE): According to primedatabase.com, Offers for Sale through stock exchanges (OFS), which is for dilution of promoters’ holdings, saw an increase, from Rs 17,326 crore raised in 2019-20 to Rs 30,114 crore$ raised in 2020-21. Of this, the government’s divestment accounted for Rs 19,927 crore or 66 per cent of the overall amount). The largest OFS was that of Tata Communications (Rs 5,386 crore) followed by Hindustan Aeronautics (Rs 4,961 crore) and IRCTC (Rs 4,408 crore). OFS accounted for 11 per cent of the total year’s public equity markets amount.

FPOs: FPOs made a comeback after several years. This was primarily on account of the mega Yes Bank FPO which raised Rs 15,000 crore. Overall, 2 companies mobilized Rs 15,029 crore through FPOs.

QIPs: 31 companies mobilized Rs 78,731 crore through QIPs, the highest ever in a financial year. This was 54 per cent higher than the Rs 51,216 crore raised in the previous year. The largest QIP of 2020-21 was from ICICI Bank raising Rs 15,000 crore, accounting for 19 per cent of the total QIP amount. QIPs were dominated by banks, NBFCs and real estate companies with them accounting for 84 per cent (Rs 66,141 crore) of the overall amount.

2020-21 also saw the first ever ReIT QIP (Embassy Office Parks raising Rs 3,685 crore).

InvITs/ReITs: The amount raised through InvITs and ReITs saw an increase of 1,353 per cent to an all-time high of Rs 33,515 crore from Rs 2,306 crore in 2019-20.

Fresh capital

Of the total amount of Rs 1,88,900 crore, the fresh capital amount was Rs 1,36,992 crore (73 percent), the remaining Rs 51,908 crore being offers for sale.

Divestments

2020-21 has been a dismal year for divestments with only Rs 33,159 crore^ being raised by the government. Public Offers (IPOs of IRFC, Mazagon Dock, Railtel and OFS of Bharat Dynamics, HAL, IRCON International, IRCTC, RVNL, SAIL and TATA Communications) at Rs 22,594 crore (68 per cent) was the most used mode followed by Buyback (EIL, GAIL, HPCL, KIOCL, NMDC, NTPC, NALCO and RITES) at Rs 6,441 crore (19 per cent).

Rights Issues: Mobilisation of resources through rights issues, according to primedatabase.com, reached an all-time high of Rs 64,256 crore in 2020-21, which was higher by 15 per cent than Rs 55,998 crore that was raised in 2019-20. This was primarily on account of 1 large issue of Reliance Industries (Rs 53,124 crore). By number, the year witnessed 20 companies using the rights route in comparison to 13 companies in the previous year.

Public bonds: The public bonds market saw a near 31 per cent decrease with 18 issues raising Rs 10,488 crore* in comparison to 35 issues raising Rs. 15,146 crore last year. The largest issue was from PFC raising Rs.4,429 crore. Debt Private Placements: The amount raised through debt private placements reached an all-time high of Rs 7,02,697 crore (as on March 26, 2021), up from Rs 6,75,236 in 2019-20. This was mobilised by 656 institutions and corporates. The highest mobilisation through debt private placements during the year was by NABARD (Rs 59,072 crore) followed by REC (Rs 50,370 crore), HDFC (Rs 49,843 crore), NHAI (Rs 44,953 crore) and PFC (Rs 40,966 crore).

Overseas bonds: In addition, Indian companies also raised Rs 2.30 lakh crore through overseas borrowing (including ECBs**), down 55 per cent from Rs 5.07 lakh crore in 2019-20.