A sharp jump in the number of Initial Public Offerings (IPOs) in the past couple of months have analysts attributing reasons ranging from investors with deep pockets seeking quick gains, to an increase in grey market premiums, and a general risk taking trend.
Data from Prime Database Group (PDG) shows a stark contrast compared with last August and September, when only two IPOs in each of the months raised about ₹3,000 crore. But August 2023 witnessed 7 IPOs of almost ₹5,000 crore, and the 12 IPOs announced so far this month have been worth ₹11,582 crore.
Pranav Haldia of PDG ascribed it to the general trend of primary markets tracking the secondary markets, which have been bouyant lately.
‘Fear of missing out’
“There is a feeling of being left out... Investors have lots of money and they are investing to make listing gains which are now shrinking,” said Arun Kejriwal of Kejriwal Research & Investment Services. “The grey market premiums have fallen. It shows we are coming to the end of the good time,” he added.
Ambareesh Baliga, an independent analyst said, “No one knows how long this bull run will last.. today no investor is looking at the prospectus of the IPO-bound companies. People are investing based on grey market premium.”
The capital market is also flooded with SME IPOs with as many as 27 of them scheduled this month.
“People are investing to make quick money and there is a lot of speculation,” Mr. Baliga said. “Greed is leading to issues getting oversubscribed,” he added.
