2019 has been a very productive year for IPOs. However, we saw many vacant months when there has been no sneak-peak into IPOs. Late 2019 have proved to be a very productive timeline for Initial Public Offerings of several companies in India and the world.
Hey, wait... don’t you know what IPO is? Well, in that case you have to look back to our previous blogs and YouTube videos where we have succinctly discussed about it. I hope, the content would not only clear your basic idea but would also inject keen interest into you.
So, let’s come back to the main discussion. Was SEBI delaying in giving the approval to come up with IPO in 2019? Nay! SEBI had approved of many companies to carry forward their Initial Public Offerings, however, they were waiting for their most suitable time so that market would seem most effective to grasp profits into their account. So, they came, they offered and they earned profit. After IRCTC’s blockbuster IPO, companies started feeling tempted towards coming up with theirs. IRCTC’s issue price stood between Rs. 315 and 320. Then its stock was enlisted in the stock exchange at the price of Rs 644. So, in the very first day, the investors got 100% return. After IRCTC Ujjivan Small Finance Bank too got a very positive response, as it also gave 50% return. Its issue price stood between Rs 37 and 38 and its stock was enlisted in the stock exchange at the price of Rs 58. Ujjivan Bank’s IPO was subscribed was subscribed for 160 times, which is a quite great number. So, historically the year ended with a very positive notch.
Now, let’s know about the companies expected to be coming up with their IPOs in 2020.
SBI Card sells credit cards. 76% stakes of SBI Card belongs to the State Bank of India and the rest 24% belongs to The Carlyle Group. SBI Card’s IPO is an offer for sale. Well, that may sound quite interesting when you hear the word “sale”. What is it? In that case, the company is not going to raise capital by issuing new share. Rather, the existing investors of the company are going to sell their shares i.e. Both SBI and The Carlyle Group are going to sell their stake through this IPO. SBI card is the second largest credit card company in India with 18% market share preceded by HDFC Credit card.
Credit card is quite under penetrated in India. As of now, only 3 out of every 100 Indians own a credit card. SBI Card is actually playing a quite good game. In the first half of the financial year 2020, SBI Credit card earned the profit of Rs. 725 cr. Generally Govt. Companies come up with good deals for the retail investors, so let’s see at what valuation SBI Card brings its IPO!
If you think that India’s credit card market is going to get a boom, then you can look into it.
HDB Financial Services is an NBFC (Non Banking Financial Company) of HDFC. Mr. Aditya Puri is the chairman. Mr. Puri is going to retire from HDFC. It is often assumed that after retirement Mr. Aditya Puri is going to invest his full time into HDB Financial Services. This is perhaps one of the prime reasons behind many eyes upon this particular IPO. HDFC Bank has 95.5% share on HDB Financials. The company gained profit of Rs. 1724Cr in the financial year 2019. HDB Financial Services would be HDFCs 5th company that would be listed in the stock exchange. Before HDB, other companies of HDFC Group like HDFC, HDFC Bank, HDFC Life and HDFC Asset Management Company Limited are already listed in the stock exchange.
Equitas Small Finance Bank has filed for an IPO of Rs. 1000cr.
The other one that is coming up with its IPO is PNB Metlife Insurance. Its IPO would be an offer for sale. In this case, the existing investors of the company will sell their stakes. PNB has 30%, Metlife has 26%, ELPRO International has 21%, J&K Bank has 5% and M. Pallonji Group of Companies has 18% stakes on PNB Metlife. So, all these investors will sell almost 25% stakes through this IPO.
UTI is also planning to come up with its IPO. SBI, Life Insurance Corporation of India, Bank of Baroda, Punjab National Bank and T.RowePrice are the main investors of UTI AMC. You might have heard the name of T.RowePrice in recent times. T.RowePrice has recently invested in Paytm. Many of the investors are going to dilute their stakes slowly.
Recently, Burger King too has filed for IPO. Burger King is a US based burger chain. Its Indian arm is coming up with an IPO. Burger King is planning for an IPO valuation of Rs 400cr. As of now, Burger King has 202 outlets in India. The company plans to extend this number till 325 by next year. Burger King came to India in 2014. It has witnessed a very firm growth in the country.
Other companies such as Monte Carlo, EaseMyTrip, Mazagon Dock Shipbuilders Limited are also coming up with their IPO. EaseMyTrip will also come up with an offer for sale process. The founders of EaseMyTrip will sell their stake worth Rs 510cr.
In the union budget 2020, the finance minister Nirmala Sitharaman has also talked about bringing IPO of LIC very soon. Is it a good move? Let's have an eye on it.
So, 2020 is going to be a year of IPOs. Hope, that the outcome becomes very fruitful for the investors.