It’s Raining IPOs: Patanjali, Rolex Rings, and More

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If you didn’t already know, Rolex is one of the top five forging companies in the country. It manufactures and supplies hot-rolled forged and machine-bearing rings globally. The company provides components for vehicles, from two-wheelers to commercial vehicles and off-highway vehicles. Rolex is present in other segments such as wind turbines and railways, too. On Wednesday, the company announced the opening of its IPO. Rolex’s IPO is supposed to close on Friday. The company is looking to expand its solar project capacity, which in turn, is expected to help it reduce its carbon footprint and increase profit margins. Rolex has set the price band for the issue at the Rs 880-900 range. 

While all this was taking place, other companies are rushing in to tap the market after the strong investor response to Zomato’s IPO. Some of these, such as Devyani International, CarTrade, and Windlas Biotech — are expected to launch their issues as early as next month. In 2021, at least 26 companies have raised Rs 38,802 crores through IPOs. This is the first time this is happening since 2017 when Indian capital market history had Rs 67,167 crores raised by 36 companies.

Among 2021’s IPO candidates, Devyani International, the owner of the franchises Pizza Hut, KFC, and Costa Coffee in India, is set to raise about Rs 1,400 crores. On the other hand, the auto classifieds platform, CarTrade is planning on a Rs 2,000 crore sale of 1.24 crore shares by existing shareholders. Nirma Group’s Nuvoco Vistas is expected to hit the markets in August as well. They have a Rs 5,000 crore IPO, out of which there will be a new issue of Rs 1,500 crores and an offer for sale of  Rs 3,500 crores. Even Ruchi Soya, Baba Ramdev-led Patanjali Ayurved’s company, is planning an FPO to reach the minimum public holding norm of 25% of a listed firm.

While there is a sure-shot euphoria in the primary market, the grey market premiums for upcoming listings have shot to spectacular levels. This is causing dealers to worry, and they are now asking investors to be cautious. The grey market premium for Tatva Chintan Pharma Chem, for example, has soared to Rs 1,140-1,150 over its initial price band of Rs 1,073-1,083. This is a leap of 105-110 percent premium over the issue price. Grey market professionals are warning that new investors must understand the difference between euphoria and strength. Only companies that have solid fundamentals will be able to ride the wave, and others will fall flat when the party is over, they say.