The IPO frenzy that India is currently witnessing is likely to reach new heights around Diwali as a handful of companies are preparing to go public. Paytm and Nykaa are two notable IPOs that are rumoured to go live before Diwali, pending approval from SEBI. Moreover, given the current market condition, sources close to the matter have suggested that they might list at a more affordable price.
To continue on this matter, individuals close to this subject have mentioned that, Paytm may consider a valuation less than $20 billion. The aim here is to attract the attention of investors, primarily the retail ones. Also, company sources have earlier confirmed that they have received strong interest from foreign investors in this $20-22 billion valuation.
The same can be said about Nykaa as well. The beauty and wellness product retailer is also attracting a huge investor interest at a valuation of $6 billion, and the management of Nykaa is also targeting the same. A source close to the company has confirmed.
Nonetheless, a question that remains here is, will this approach hold enough value for the prospective investors?
To answer it in one word, yes, it will hold enough value for investors. According to market experts, the companies will not take the whole juice out of these public issues, as they want to leave some value for prospective investors to gain post-listing.
Who Else is in Line to Go Public during Diwali Period?
Apart from Nykaa and Paytm, other companies planning to public pre-Diwali are –
- Digital payments firm Mobikwik
- Online insurance aggregator Policybazaar
- Star Health Insurance which is backed by WestBridge Capital and Rakesh Jhunjhunwala
Apart from these, various other companies are looking at these issues to gauge a market understanding. Especially, Paytm’s IPO is in primary focus here as it is likely to raise Rs. 16,600 crores.
Market Conditions to Play a Key Role Here
The Indian Stock market is currently trading high, and IPOs are attracting some wild valuations. In a situation like this, venture capitals and other individual investors are now realising the potential of a fairly priced IPO.
A senior executive of an investment bank has mentioned that companies will regulate their IPO pricing considering the flurry of DRHPs from unicorn start-ups and others.
Additionally, given the volatility of the global market, which will affect India as well, companies are worried about the success of their IPOs. Some noteworthy factors in this regard are –
- The China debacle
- Possibility of a nation-wide power shortage
- Cost inflation-led erosion of margins
Keeping these pointers in mind, firms are moving cautiously with their IPO proceedings.
Owing to a flurry of factors such as these, the spotlight is now on SEBI. Companies and investors are looking at the market regulator for a fair estimation of DRHPs and approving IPOs that will bring value to all parties concerned.
Frequently Asked Questions
- What is the possible timeline of Paytm and Nykaa IPOs?
There is no official news on the timeline of these two IPOs, as companies are awaiting approval from SEBI.
- What is the expected price band of Nykaa IPO?
There is no news regarding the price band of Nykaa’s IPO that is available yet.
- What is the expected issue size of Paytm IPO?
Rs. 16,600 crore is the expected size of Paytm IPO.