KOCHI: With the stock market sentiment weak, at least four Kerala-linked companies including Thrissur-based based ESAF Small Finance Bank, and Kochi-based Popular Vehicles and Finance Ltd have postponed their initial public offerings (IPOs).
Last week, Joyalukkas India Ltd, the Thrissur-based jeweller, announced that it was scrapping its Rs 2,300 crore IPO.
According to sources, Federal Bank-promoted Fedbank Financial Services Ltd (Rs 1,700 crore) and Asianet Satellite Communications Ltd (Rs 765 crore), which filed their draft document for the IPO last May, are also likely to defer the share issuance due to weak market conditions. Some of the big IPOs that hit the market last year are trading at a big discount, further dampening investor sentiment, they said.
Reflecting this is the fact that the first two months of 2023 calendar saw not even a single IPO hitting the market, said industry officials. “Primary market sentiment is always directly related to the secondary market condition,” said Pranav Haldea, managing director, of Prime Database, a Delhi-based company that tracks the primary market.
It’s very difficult to time the market, says expert
Haldea said several companies that received the approval for IPO from the capital market regulator Sebi had allowed the nod to expire. As per the rule, the companies have to hit the market within 12 months of receiving the Sebi approval for the IPO. According to Prime Database, Popular Vehicles and Finance was planning to raise Rs 750 crore, and it received the Sebi approval in September 2021. ESAF Small Finance Bank’s nearly Rs 1,000 crore IPO received approval in October 2021.
Paul Thomas, MD & CEO of ESAF Small Finance Bank, said: “Our DRHP (draft red-herring prospectus) approval expired in October and we are in the process of refiling. We will be doing that in March.” He admitted that the market conditions are not favourable now. Thomas said the Sebi approval can come very fast and it can tap the market this year itself if the conditions turn favourable. Confirming the postponement, John K Paul, MD of Popular Vehicles & Finance, said: “Last year, when we filed for the IPO, the market especially the automobile sector was in a bit of a turmoil with chip shortage and hence the supply of vehicles. Given that sentiment, we decided to postpone the IPO.”
He said the company hopes to tap the market in 2023-24.
IPO approval for both Fedbank Financial Services and Asianet Satellite Communications will expire after May this year. An email to Joby Mathew, company secretary of Asianet Satellite, elicited no response. An attempt to get comments from Federal Bank, which owns nearly 74% stake in Fedbank Financial Services, also proved futile.
Nikhil Gopalakrishnan, CEO of Pentad Securities, said there’s no ideal time for IPOs. “Market conditions are volatile, and it’s very difficult to time the market,” he said, adding that the companies can hit the market even when the sentiments are bad.