Summary: After public sector insurance behemoth Life Insurance Corporation of India (LIC) trimmed the size of its initial public offer (IPO) from over Rs 60,000 crore to Rs 21,000 crore, Softbank-backed Delhivery has trimmed its issue size from Rs 7,460 crore to Rs 5,500 crore to align with the volatile market conditions. Delhivery’s IPO will be second biggest this year after LIC and among the top-five since 2021. Besides these two IPOs, nearly half a dozen companies plan to raise over Rs 7,500 crore via primary markets in May alone. According to a recent note by Prime Database, 54 companies plan to raise a massive Rs 1.4 trillion, including the LIC IPO, in 2022 and currently hold market regulator Securities and Exchange Board of India's (Sebi’s) approval. Another 43 companies, the note said, are looking to raise about Rs 81,000 crore where Sebi approval is still awaited. The largest IPO in 2021-22 in terms of size, which was also the largest Indian IPO ever till the LIC IPO came around, was of One 97 Communications (PayTM) for Rs 18,300 crore. So, what’s in store for primary markets in the months ahead? Will the fund raising frenzy slow a bit? According to Sunil Tirumalai, strategist at UBS Securities India, primary markets will definitely see a fallout of slowing flows and pressure on valuations. The downsizing of LIC IPO is an example of the same, he says. Now let’s go to Ambareesh Baliga, an independent market analyst, to understand the dynamics in details. IPOs involve long-term planning, he says adding that trimming the IPO size is a prudent thing to do given the current markets. Timing the IPO is difficult, but companies need to leave something on the table for investors for the IPO to garner subscription, he says. So, will the volatile market conditions see companies trim their offer size? VK Vijayakumar, Chief Investment Strategist of Geojit Financial Services says IPOs do well in a bull-market; key is to get the issue price right. LIC’s original plan to offload 5% equity was an uphill task in the current market, he says adding that issuers need not wait for a ‘favourable’ time / postpone issue. Message from the market is clear: Get the pricing right, he says. Today, the markets will react to the US CPI numbers and how the global markets perform. Stock-specific action is likely to continue amid volatility.
