The Echo-nomist

SEBI has been particularly busy for the past few months. Companies are lining up with extensive prospectus, waiting for SEBI’s approval so that they can raise funds through the public. India’s markets are hot right now. The primary market is witnessing one of their best phases in terms of companies wanting to go public and the amount raised by them. The average filings have increased massively. In fact, in July, more than 30 companies filed their draft documents with the capital regulator. That’s an average of more than one per day! That’s what I mean when I say they have been busy. 

India doesn’t really have a type. Companies from various industries are going public. Paytm, Zomato, PolicyBazar, Delhivery, Nykaa, MobiKwik, CarTrade, Barbeque Nation, Aditya Birla Sun Life AMC, Mrs. Bectors Food… I could go on and on. But let’s talk about some of the major upcoming IPOs. 

Paytm 

Paytm is one of India’s most valued companies. They are expected to be India’s largest issue with a ₹18,300 crore Initial Public Offering by parent One97 communications. Their IPO bidding ended with 1.89x oversubscription. Its retail size is much larger than that seen in other recent IPOs such as Zomato and Nykaa. The portion reserved for them was oversubscribed early and lapped up for 1.66 times the 87 lakh shares reserved for them! 

“Oh I’ll just Paytm the amount to you,” “Bhaiya, Paytm hai?” 

Paytm has become so common, it’s used like a noun. They offer a variety of services like sending money offline, buying things at brick and mortar stores etc. Their customer base is as large as America’s whole population- a whopping 330 million. Ant Group, SoftBank, Berkshire Hathaway together own 1/3rd of Paytm. VCs didn’t shy away from this unique (yet successful) business investment. . 

The business environment has been very favourable for them. When the government announced demonetisation of ₹500 and ₹1000 notes immediately, panic set among the people. It was not easy for the people, but it did accelerate the shift to a cashless economy. Paytm emerged like a hero and this boosted their operations. Similarly, during the pandemic, it got another nudge since people refrained from using cash due to safety measures. 

And now, Paytm is all geared up to hit the stock exchanges 

Policybazaar/ Paisabazaar

Policybazaar is an insurance aggregator and multinational financial technology based company. Paisabazaar compares products such as loans, insurance plans and credit cards offered by banks or financial institutions. Their parent company, PB Finetech, received an overwhelming response from investors. Their shares were oversubscribed by the public 16.59 times! Basically they received bids for 57.24 crore equity shares as against their offer of 3.45 crore. With a price band of ₹940-980 per share, they are seeking a valuation of $6.1 billion. 

What’s interesting and unique about their IPO is that they’re actually a loss making startup. This didn’t stop investors from enthusiastically participating in their allotment. The portion reserved for qualified institutional buyers was subscribed 24 times. The company has definitely narrowed its losses and profitability might not be that far. While only 27% of India’s population is financially literate, this rate has increased in the past few years. This will improve the prospects of PB Finetech. 

Anyway, they are expected to make their debut on Dalal Street on November 15! 

Delhivery 

A decade ago, Sahil Barua, Mohit Tandon and Suraj Saharan quit their corporate jobs because they had a business idea. In 2011, Delhivery was launched as a “delivery-boy” for restaurants. But soon, they spotted a better business opportunity – India’s e-commerce market! It’s not easy to ship and coordinate orders and their payment. You need warehouses, last-mile distribution, a tech platform, organised backend processes to handle cash on delivery (because Paytm wasn’t popular in early 2010s). Delhivery saw this as an opportunity and that’s been shaping their business ever since. They don’t just cater to e-commerce though. Their services include: freight, supply chain services, parcel transportation etc. 

They are the largest and fastest growing fully-integrated logistics services player in India (as of 2021). Their revenue is in billions, they have shipped more than 1 billion express parcels, fulfill 20% of all e-commerce delivery volumes AND they’re a loss making company! Delhivery’s business depends upon the D2C market and that seems to be doing pretty well, in their favour. As this market grows, they will be there to fill the demand and supply gaps. So that should makeup for their losses. 

Delhivery filed a prospectus with SEBI in hopes of raising ₹7,460 crore from the IPO. The company is seeking a valuation of around $6-6.5 billion. Some of their existing investors like Carlyle, SoftBank etc. are also partially selling their stake in the company as OFS. They are still in the early stages of going public, but it will be interesting to observe their subscription and debut on the markets. 

Sapphire Foods 

Whether it be KFC’s chicken or Pizza Hut’s pan pizza or Taco Bell’s crunchy taco, we have all craved them at some point in time. Well, all of them have one parent company, Sapphire foods India. They have established their presence in the market and enjoy a good position in India and Sri Lanka. They have grown to be one of India’s largest restaurant franchise operators. In Sri Lanka, their revenue represents approximately 35% of the total market revenue and they represent 39% of the total outlets in the market.

Covid directly impacted the business as customers became more particular about hygiene and brick and mortar stores were empty. This was the perfect opportunity for them to make use of their omni-channel strategy. And they did. Their brands are accessible through dine-in, takeaway, own delivery and delivery via aggregators (like Zomato, Swiggy). They were able to control their revenue and made sure it didn’t fall much. Guess what? They’re also a loss making company. They received a bid for ₹6.4 crore against their total issue size of ₹96.63 lakh (6.62 times). In this IPO, the company won’t be getting any of the proceeds since the entire issue is an offer for sale by existing shareholders. They don’t have a fresh issue. 

Sapphire Foods is all set to hit the Indian markets!

Latent View 

This is a record-breaking IPO. Quite literally. Their issue was oversubscribed a whopping 338 times!! The bids totalled ₹1.13 trillion when it closed. The strong investor response to Latent View’s IPO helped overtake the record set by Paras Defence and Space Technologies Ltd’s IPO (which was oversubscribed neary 304 times), just a few weeks ago. 

It was founded by an IIM graduate- Venkat Viswanathan. They provide data and analytical solutions to companies and help them in predicting their revenue streams, anticipate product trends and popularities, improve customer retention etc. 

They plan on raising ₹600 crore from their offering, which is a mix of fresh issue and offer for sale. The public responded enthusiastically to their subscription. The portion reserved for retail investors was oversubscribed 123 times and non-institutional was oversubscribed 882 times! 

They just have one last step to complete, enter the markets… 

These are merely 5 out of the 126 prospectus filed with SEBI so far in 2021. But they give you an idea of just how well the primary market is doing in India. So many successful IPOs is also setting off a chain reaction where other companies are going public due to the blockbuster debuts in the market. Indian IPOs have already raised a record $9.7 billion and some big issues are still lined up. 

The perspective of investors in the market is also changing. This is the first time so many loss making firms are going public in India. Zomato’s IPO faced some apprehension due to their losses but from there on out, loss-making hasn’t been making the investors hesitant. This is a step forward since traditionally, Indian markets and investors are concerned if the firm makes losses. 

2021 has been a record-breaking year for Indian markets. It has established a start-up environment with business visionaries and attractive investment opportunities. Some people think this is a startup bubble due to the bullish markets. It may be, it may not be. Only time will tell.