IPOs are back. BSE Ltd will be the first IPO to test the markets post demonetisation. Other big corporates are thinking about coming out with an initial public offering (IPO) for their companies. The list includes the likes of NSE Ltd, Central Depository Services (India) Ltd (CDSL), and Avenue Supermarts Ltd (which runs the D-Mart store chain).
Even state-owned companies such as Cochin Shipyard Ltd and Hindustan Aeronautics Ltd (HAL), have reportedly been preparing for an IPO. India is likely to remain abuzz with IPO activity in 2017.
2016 saw several major issues, such as with ICICI Prudential Life, PNB Housing Finance, small finance bank licensee Equitas Holdings Ltd, and pharmaceutical firm Laurus Labs Ltd. While global IPO activity witnessed a fall in both volume and value terms in 2016, as per EY's Global IPO Trends, India was a standout performer.
Globally, the number of IPOs in 2016 fell 16% year-on-year to 1,055 and capital raised was down 33% to US $132.5 billion. This is on the back of political and economic uncertainty. India, however, went the other way - a 38% increase in deal volume and a 79% surge in proceeds raised. India's IPO activity hit a six-year high, and stock markets ranked as the seventh most active in terms of number of deals globally.
In the coming months, we are even likely to see companies from new-generation sector such as renewable energy, in addition to the traditional banking, insurance and consumer goods sectors.
Are you wondering why there's been a surge in IPOs in India, while everywhere else it has plummeted? According to EY Global, it's because of continuing regulatory reforms and positive investment climate. Adding policy improvements like implementation of GST (goods and services tax) could fuel even more demand. This in turn would result resulting in the need for equity and more action in the IPO marketplace.
However, the IPO season can be unpredictable. In high season when the markets are rising, investors are willing to pay up. The slightest sign of a weak market, and the season is quick to change. And so does the hype around many of the stocks, especially the fundamentally weak ones.
If you ask us, every IPO needs to be evaluated on its own merit. When there is a need to go through a checklist for buying stocks, why not so in the case of IPOs?
There are several big IPOs in the pipeline in 2017. In case you wish to run them through a handy checklist, we have something for you.
Download our Handbook of IPOs to be able to pick only the right ones for you.
For information on how to pick stocks that have the potential to deliver big returns, download our special report now!
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