The Indian IPO market has picked up momentum once again after four months of pause. The investors are returning after their frenzied sell-off in March that caused the SENSEX to take a nosedive. But since the market now looks more animated, it is the right time to discuss the upcoming IPOs in 2020.
2020 has been an extraordinary year in many ways so far. The worldwide pandemic situation has also taken effect on India and its economy. At the wake of COVID-19 spread, the country went under a nationwide lockdown which dampened industry production, causing supply and demand disruption, and sending many companies to count their mounting losses. The Indian stock market, which is highly sensitive to national and global macroeconomic factors, has seen a steep decline in indexes as investors evade the market. In March, before the lockdown was announced, SBI Cards and Payment’s IPO was the last big IPO launch in the market, received a lukewarm response from investors. But, Rossari Biotech IPOs, launched in July saw massive subscription from investors, which is undoubtedly a positive indication.
Now, let’s consider the list of upcoming IPOs of 2020 that are worth watching out for.
Life Insurance Corporation of India (LIC) IPO
The list of top upcoming IPOs would remain incomplete without mentioning the proposed IPO launch of LIC India, rumoured to be the largest ever in the Indian market.
During the budget session of 2020, the government proposed divestment of Life Insurance Corporation of India.
LIC, the largest and the major market player in the domain of life insurance, is a state-owned institution. Because of the sheer size of the corporation, LIC’s IPO launch is going to be the single largest IPO launch in India, expected to fetch a valuation of around 8-10 lakh crores.
The IPO launch is arranged around the second half of the fiscal year. Recently, LIC has nominated Edelweiss Financial Services Ltd and Deloitte India as pre-IPO advisors.
Another name to look out for in upcoming IPOS in 2020 is Burger King. The 200 outlets strong quick-serving restaurant, a competitor of MacDonald’s in India, is also in line to launch their IPOs. They were supposed to make the debut in March but postpone the plan amid rising uncertainties due to COVID-19.
As per SEBI filing, the company was trying to raise Rs 1000 crore from the market which it intends to invest in magnifying its presence in India by 2025. Currently, the food chain is present in 47 Indian cities with 216 restaurants.
Its peer companies Westlife Development and Jubilant Foodworks, promoters of McDonald and Dominos respectively, are already listed companies and their shares traded 6x and 4x respectively in 2019, which might attract investors to the new entrant from the fast-food domain.
Barbeque Nation IPO
This Indian restaurant chain is all set to make its debut in the Indian stock market with an IPO share proposal north of Rs 1,000 crore. Barbeque Nation, in July, cleared its intention to hit the market with fresh equities and offer for sale shares from the promoter’s group.
The restaurant chain received SEBI green signal in 2018 but shelved the idea amid economic uncertainties.
BBQ Nation, a casual dining restaurant, has 138 outlets in India with overseas presence in UAE, Oman, and Malaysia.
India’s largest stock bourse, NSE also has IPO launch on its plate. The exchange approached SEBI in February with the proposal to receive a nod from the market regulator after inspecting all the legal aspects for the same.
NSE IPOs are expected to surface in the market during the third quarter of 2020. According to SEBI chief, Ajay Tyagi, the IPOs will contain offer for sale (OFS) scrips from the existing shareholders.
National Commodity and Derivatives Exchange has taken a leaf out of NSE’s book and plans to launch its IPO offers. The size of the IPO is expected to be close to Rs 500 crores, including fresh shares and offer for sale shares from existing shareholders. Among existing shareholders, NABARD, Punjab National Bank, Oman India Joint Venture Fund, Canara Bank and IFFCO have decided to participate in the OFS.
The funds from the IPO will go towards bolstering the core settlement guaranteed fund, net worth requirements of National Commodity Clearing Limited and general corporate purposes.
Equitas Small Finance Bank
Equitas Small Finance Bank, a largest in India in terms of the number of banking outlets, received a green signal from the market watchdog in March 2020 to launch IPO shares in the market. The bank approached SEBI last year in December seeking approval for the initial share sale. The issue will contain fresh shares worth of Rs 550 crores and offer for sale scrips of Rs 8 crore from the parent company, Equitas Holdings. Side-by-side, the bank is also planning a pre-IPO launch of Rs 300 crore.
The bank initially planned to launch the IPO in March 2020 but deferred the plan citing weak market due to COVID-19 outbreak.
Bajaj Energy IPO
Bajaj Energy is one of the largest private-sector thermal generating firms in India. The company has received approval to launch IPO shares worth of Rs 5,450 crores. It will comprise both fresh issuance of shares and OFS of Rs 300 crore from the promoter’s group, Bajaj Power Ventures.
Why you must keep an eye on the IPO market
IPOs are attractive to investors for the prospect of earning a higher return from an investment. Investors invest in IPOs from the underlying belief of buy low and sell high. IPOs are launched by companies that are fundamentally strong and have a long term growth plan. Hence, it presents an opportunity to invest in a company’s growth at an early stage and reap benefits from long term investment.
The performance of IPOs can reveal the underlying strength of the market – a strong economy sees more IPO launches compared to a weak economy. Like the four months pause from March to July was indicative of high volatility in the Indian stock market when it plunged into uncertainties. But with so many companies listing for upcoming IPO in 2020, the market is showing robust signs of recovery.
Overall the list of upcoming IPO in 2020 looks impressive with several big brand names. Apart from the list above, there are several more from diverse industries that will launch an IPO in FY2020-21.
The Bottom Line
The year 2019 was an exciting year for the IPO market as many top Indian companies took the IPO route to raise funds from the market. It included IRCTC, CSB Bank, Ujjivan Small Finance Bank, Prince Pipes, IndiaMart and many others. As compared to that 2020 was tepid, mainly due to the worsening COVID-19 condition in the country. But it seems that the IPO segment is gaining steam again. The list of upcoming IPOs 2020 is looking pretty impressive with the long list of top brands waiting to hit the market.