Indian IPO market sees greenshoots, but revival unlikely until elections

Xelpmoc Design and Tech

12/03/2019 11:19

By Tanvi Mehta and Arnab  Paul
    March 12 (Reuters) - Indian firms are returning to equity
markets to raise funds with two companies opening subscriptions
for initial public offerings (IPOs) this month, but sentiment is
expected to remain cautious ahead of national elections starting
in April.
    While investor sentiment for Indian equities has picked up
amid renewed hopes for a second term for Prime Minister Narendra
Modi's government, analysts expect the primary market for equity
issues to only gather pace after election results.
    "When the outcome of the elections is clear and if the
global scenario keeps improving, then we should have a good year
for IPOs," said Varun Khandelwal, managing director of asset
management firm Bullero Capital, noting foreign investors are
returning to Indian stock markets.
    Embassy Office Parks REIT's IPO consisting of a fresh issue
worth up to 52.50 billion rupees ($754.15 million), India's
first real estate investment trust listing, will open on March
18, the company said on Tuesday.  urn:newsml:reuters.com:*:nFWN20Y0TR 
    State-run e-auction company MSTC Ltd also opens its IPO for
subscription on Wednesday.  urn:newsml:reuters.com:*:nFWN20W02P
    Stock exchange data showed net foreign portfolio inflows
into Indian equities hit a 15-month high of $2.42 billion in
February, a big swing from 2018's net outflows of $4.4 billion.
 urn:newsml:reuters.com:*:nL3N20V2L4
    "Liquidity is more important for IPOs and there should be a
hunger for absorbing the papers and I think that has come back.
I see a few IPOs coming to the market in the next few months,
not immediately but maybe post elections," said A.K. Prabhakar, 
head of research at IDBI Capital. 
    About 900 million eligible citizens will vote in a
seven-stage general election, that will culminate with the
counting of votes on May 23.  urn:newsml:reuters.com:*:nL3N20X0AS
    The appetite for IPOs in India had slowed in 2018, following
a record $11 billion IPO fundraising in 2017. The NSE index
 .NSEI  has risen 4 percent so far in 2019, higher than its gain
of 3.2 percent in 2018.
    Market sentiment was hit after a series of defaults at a
major non-banking financial company in September last year,
squeezing out banking system liquidity and making it difficult
for companies to step in with primary issuance.
    At least two companies modified their plans to list amid
weak market conditions.
    Only two companies have debuted on the National Stock
Exchange so far in 2019 - Chalet Hotels  CHAL.NS  and Xelpmoc
Design and Tech Ltd  XELP.NS , according to the NSE website. 
    
($1 = 69.6150 Indian rupees)

 (Reporting by Tanvi Mehta and Arnab Paul in Bengaluru; Editing
by Subhranshu Sahu)
 ((tanvi.mehta@thomsonreuters.com; +91 80 67494756 ; Reuters
Messaging: tanvi.mehta.thomsonreuters.com@reuters.net))