Mainboard IPOs To Raise Over Rs 6000 Cr This Week; Experts Share Best Picks
Indegene, TBO Tek and Aadhar Housing Finance IPOs will cumulatively attempt to raise more than Rs 6000 crore from the equity market this week.
By Krishankant Chourasia
As the Indian stock market rides the wave of volatility grappled with uncertainties of rate cuts and general election outcome, the mainboard initial public offerings (IPOs) have arrived in May which is usually a selling month.
The three IPOs will cumulatively attempt to raise more than Rs 6000 crore from the equity market this week.
“We have seen a trend that there haven’t been many IPOs in May since the last four Lok Sabha Elections. This has been largely due to uncertainty that surrounds the Election Result. And now, three prominent companies Aadhar Housing Finance, Indegene, and TBO Tek are coming to break the spell with their IPOs. While the former two companies deal in direct consumer space, the latter is into providing digital commercial services to the life sciences industry,” said Anchal Kansal, Research Analyst at Green Portfolio PMS.
Diversifying Portfolio
Aadhar Housing Finance (AHF) is focused on providing finance to the low-income housing segment, where ticket size is generally less than 15 lakh. AHF has the highest assets under management (AUM) amongst peers amid the government push to housing for all through its Pradhan Mantri Awas Yojana.
Two years ago, its peers Home First Finance and Aptus Housing priced their IPO at a 50 per cent premium, hence, the upside offered by Aadhar Housing IPO seems to be much more attractive. On the numbers side, the company is performing well with its PAT jumping 35 per cent year-on-year (YoY), added Kansal.
TBO Trek, a travel distribution company as a global B2B platform for travel agents and operators. The company’s shares are trading at a premium in the grey market. The company intends to use the proceeds for operations as well as acquisitions. Although travel companies like Easy My Trip has not performed very well in the market, the numbers for TBO Trek tell an impressive story, having a prominent position in terms of Gross Transaction Value, highlighted Kansal.
“On valuation at the upper band of Rs 920, the issue is asking for a Market Cap of Rs 9990 crore. Based on annualised FY 2024 earnings and fully diluted post-IPO paid-up capital, the company is asking a price to earnings (PE) of 48.6 times which seems reasonable by looking at industry growth,” said Rajan Shinde, Research Analyst, Mehta Equities.
With an innovative platform, strategic approach to data utilisation and commitment to fostering a collaborative ecosystem solidifying their position in the dynamic travel and tourism industry with significant growth potential. Hence, considering all the parameters, we are recommending investors to “Subscribe” the issue for listing gain only, recommended Shinde.
Indegene IPO gives investors an opportunity to invest in digital-led commercialisation services tailored for the life sciences industry.
“The company has shown a substantial growth in revenue from operations and net profit in FY2023. The company is asking a PE of 33.6 times which seems fully priced looking at near term growth triggers. But considering its unique business model and virtual monopoly in its business that generates over 98 per cent global revenue, premium valuation seems appropriate,” said Prashanth Tapse, Senior VP, Mehta Equities.
Hence, considering all the parameters, we are recommending investors to ‘Subscribe’ the issue for the long-term and if we get good healthy listing gains above 25 per cent and we recommend conservative investors to book profit, said Tapse.
The IPO Road Ahead
FY24 proved to be a very special year for IPOs and the primary market with over 75 new issues, marking the highest count in two years.
Promoters as well as investment bankers and Investors are equity keen to capitalise on the mood of the overall market ahead of the stronger general election results and fundamentally good businesses are coming to raise money with decent valuations along with robust business models giving investors a healthy room for listing gains which is keeping market trend intact, said Tapse.
FY25 may also see a similar trend with more than 100 companies expected to raise funds for growth as well as via offer for sale (OFS) and the worth can be anywhere near Rs 1 lakh crore via IPOs. A few big names in the pipeline like OLA Electric Mobility, OYO, Tata Play, Waaree Energies, NSDL, Go Digit General Insurance, Joyalukkas India, are ready to tap the markets in the next one or two quarters.
