The journey of this year's stock market debutants started on a bumpy note. This was due to multiple external factors that soured investor sentiment.
Sky high inflation, the Ukraine-Russia war, and FII selling weighed heavily on the IPO market.
However, as market sentiment has reversed, IPOs (initial public offerings) are now gaining traction.
Here are five companies that are most likely to hit the market soon.
#1 Oravel Stays:
First on our list is Oravel Stays, also known as OYO Rooms.
The company filed its prospectus in October 2021. The prospectus got approval in January 2022.
According to the prospectus, the company plans to issue fresh capital of Rs 70 bn. The other Rs 14.3 bn will be through stake sales by investors. The IPO is expected to launch sometime in 2022.
The cash generated will be used for the repayment of debt and funding of its growth initiatives.
OYO is a leading new-age technology platform. It empowers the fragmented global hospitality ecosystem. The company's focus is on short-stay accommodation.
It has the largest footprint in hotel storefronts in India and overseas. It has an asset-light business model, as the company does not own the storefront listed on its platform.
As a part of the expansion, it has added 1,250 corporates since March 2022. It is recently focusing on the mid and premium segment brand categories.
#2 Aadhar Housing Finance:
Second on our list is Aadhar Housing Finance.
The company filed a DRHP (Draft Red Herring Prospectus) with the market regulator in January 2021. It got approval for the same in May 2022.
The company is seeking a Rs 73 bn valuation. The offering will comprise a new issue up to Rs 15 bn and an offer for sale of Rs 58 bn.
The proceeds will boost its tier one capital base.
Aadhar Housing Finance is a housing finance company in India. It offers products ranging from mortgage loans to loans for construction and acquisition.
As of the financial year 2022, it had the largest customer base and the highest disbursal rate. It was also the largest housing finance company Assets Under Management (AUM).
It is one of the largest housing finance companies in the Indian mortgage market with extensive branch networks. It helps the company with loan sourcing.
The company has partnered with TCS for its end-to-end business process. It is a blockchain-based cloud platform.
For the financial year 2023, it is focusing on the low-income housing segment in India.
#3 API Holding:
Third on our list is API Holding, the parent company of PharmEasy.
The company filed its DHRP in November 2021. In February, it got approval for raising Rs 62.5 bn through IPO.
The company will use Rs 19.3 bn from the IPO proceeds to repay or prepay borrowings. The remaining Rs 12.6 bn will go toward organic growth initiatives. It will also allocate Rs 15 bn on opportunities through acquisitions and other strategic initiatives.
PharmEasy is one of the largest e-pharmacies in the country. It recently acquired a majority stake in Thyrocare Technologies. This deal is the first-ever acquisition of a listed firm by a unicorn startup in India.
The approval comes amid speculation that PharmEasy may postpone its IPO. It is due to market volatility, which has been particularly harsh on the shares of new-age firms that went public last year.
The speculations became a reality last week when the company withdrew its draft red herring prospectus (DRHP). It said in a notice that due to “market conditions” and “strategic considerations”, the DRHP will need to be withdrawn.
The company has a competitive advantage due to the increasing use of the internet and less costly maintenance.
The company, for the financial year 2023, is planning to open 200 offline channels.
#4 Bajaj Energy:
Fourth on our list is Bajaj Energy.
The company had filed its DHRP in April 2019 to raise the Rs 54.5 bn. The issue got approval from the market regulator in September 2019.
The IPO of Bajaj Energy will consist of a public offer of Rs 51.5 bn and an offer for sale of Rs 3 bn.
The company will use the proceeds of the IPO to buy the shares of LPGCL from Bajaj Power Venture. The remains will be for general corporate purposes.
Bajaj Energy is a private-sector thermal generation company in India. It develops, finances, and operates thermal power plants. It has a gross installed capacity of 2,430 MW.
It is the largest private sector power producer in Uttar Pradesh. The company also has a long-term supply agreement with Central Coal Field.
It is currently working on the expansion of its power generation capacity by 400 MW for Rs 16 bn. It will be to build up a parallel revenue stream. It will reduce dependence on the cyclical nature of its main money-spinner, sugar.
#5 TVS Supply Chain Solutions:
Last on our list is TVS Supply Chain Solutions.
The company filed its DRHP in February 2022 to raise Rs 50 bn. It got approval for the issue in May 2022.
The IPO will consist of a fresh issue of Rs 20 bn and an offer for sale of up to Rs 20 bn.
The net proceeds of Rs 11.6 bn will be for repayment of borrowing while Rs 750 m will be towards the capitalization of a subsidiary in Germany.
The company will also us Rs 600 m to increase its stake in Rico UK. The remaining funds will be for the inorganic growth of the company.
TVS Supply Chain Solutions is part of the TVS group. It is among the fastest-growing integrated supply chains in India in terms of revenue. The company aims at providing a specialised solution to the customer's supply chain.
The company is a leader in end-to-end solutions enabled by domain expertise and knowledge base. It is also one of the fastest-growing third-party coordination markets in India.
For the expansion, the company is planning to deploy the capital of its subsidiaries in Germany, USA, and Thailand.
Below is the table showing the issue size of the companies.
Issue Size (bn)
Aadhar housing finance
TVS Supply chain
IPOs have always been a great way to get your skin in the game early. It often seems like the safest bet as you buy low and sell high. It makes investing in IPOs a high-growth potential opportunity.
But it is not as easy as it sounds. The critical part is to choose the right companies. So, how to select the right companies?
To begin, one must evaluate the viability of the business. It includes insights into products and services, strengths, and long-term growth opportunities.
Along with this, the financial position plays an important role. Constant growth in revenue and sales is essential for future performance.
It is also important to dwell deeply on the promoter's stake. It is as it indicates the commitment of the management to the company.
Sometimes, due to the hype of the stock in the market, the IPO can get overpriced. It could further lead to a crash post-IPO. It was one of the reasons for the failure of one of the biggest IPO Paytm.
This meltdown has made the street wary of the expensive companies. This sentiment, along with the market volatility, has diminished other companies from exploring the IPO market in 2022.
A similar trend is visible in the global IPO market too.
The planning must be aligned for a successful journey of the IPO. The alignment of key stakeholders, broader market conditions, timing, and financial performance are factors for a successful IPO.
For more information on IPOs, check out the list of upcoming IPOs.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)