Initial Public Offering - IPO

Booming IPO And Its Impact on the Stock Market

Nowadays we are seeing a lot of News regarding the IPOs issuing in our Stock market. This week we saw the News regarding the IPO Of Companies like Burger King and Mrs. Bectors. There is a strong relationship between the primary markets where IPOs are issued and the Secondary market. So let us understand Booming IPO and its impact on the Stock market but before that let us understand basic concepts related to IPO.

What is an IPO?

IPO is Initial Public Offering, whenever a company wants to raise funds from the Public they have to list themselves on the stock market.

Why IPO is required for a Company?

Whenever Company plans to expand its business or repay its old debts or exit to previous investors it tries to raise funds, at that time the Company has two options either to borrow debt or to raise capital by sales of shares.

The problem with the debt or borrowings is that the Company has to repay it including its interest whereas if the Company sells its shares they don’t need to repay the amount, the only drawback is that the company shares its ownership with the investors.

 Now let’s see Booming IPO and its impact on the Stock market, and How they are currently performing.

Gland Pharma IPO:

Gland pharma is a Hyderabad based company known for its generic drugs it sells its products to more than 60 companies including the USA, Canada, Australia, etc.

The objectives of the issuing of IPO was:

  1. To finance the incremental working capital requirements of the Company.
  2. To meet funding requirements for Capital expenditure requirements.
  3. To meet the general corporate purposes
  • The issue type was Book Built issue
  • Face value: Rs.1 per share
  • IPO Price: Rs.1490- Rs.1500 per share
  • Market lot: 10 shares
  • Its total issue size 6479.55 Cr
  • IPO issuing date was 20th November 2020
  • On the next market opening day i.e on 23rd November, the Nifty pharma index rose from 11526.75 to 11737.20 points that are 1.8%, and took an upward trend.
  • The current market price of the stock is Rs. 2229.09 (48.6%)

Equitas Small Finance Bank:

Booming IPO & Its Impact on the Stock Market

The Equitas small finance bank is the second largest small finance bank in India. The Company provides microfinance loans to promote financial inclusion, housing finance, vehicle finance, and MSE finance. It offers financial products according to customers’ requirements.

 The objective of the IPO:

To use the Net Proceeds from issue offer to increase the Bank’s Tier 1 capital base to meet future capital requirement.

  • The issue type was Book Built issue
  • Face value: Rs.10 per share
  • IPO Price: Rs.32- Rs.33 per share
  • Market lot: 450shares
  • Its total issue size was 517.6 Cr
  • IPO issuing date was 2nd  November 2020
  • On the next market opening day i.e on 3rd November, the Nifty bank index rose from 11669.15 to 11813.50 which is 1.23%, and took an upward trend.
  • The current market price of the stock is Rs. 37.55(13.78%)
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Mazagaon Dock IPO:

Booming IPO & Its Impact on the Stock Market

Mazagaon dock shipbuilders Ltd is India’s foremost defense public sector undertaking shipyard under the Ministry of Defense. Its primary business is to construct and repair warships and submarines for MoD.

Objectives of the IPO:

To gain the benefits of share listing on the stock exchanges.

  • The issue type was Book Built issue
  • Face value: Rs.10 per share
  • IPO Price: Rs.135- Rs.145 per share
  • Market lot: 103 shares
  • Its total issue size was 443.69 Cr
  • IPO issuing date was 12th October 2020
  • The current market price of the stock is Rs. 194.65(34.2%)

UTI Asset Management Company:

Booming IPO & Its Impact on the Stock Market

UTI Asset Management Company is in the business of administrating the domestic mutual funds of UTI mutual fund, it also provides portfolio management services to institutional clients and high net worth individuals like EPFO.

Objectives of the IPO:

To achieve benefits of listing on the Stock Exchange.

  • The issue type was Book Built issue
  • Face value: Rs.10 per share
  • IPO Price: Rs.552- Rs.554 per share
  • Market lot: 27 shares
  • Its total issue size was 2159.88 Cr
  • IPO issuing date was 12th October 2020
  • The current market price of the stock is Rs. 571(3.06%)

Angel Broking

Booming IPO & Its Impact on the Stock Market

Angel Broking Ltd is India’s oldest stockbroking houses providing broking, margin funding, advisory and financial services.

 Objectives of the IPO:

  1. To meet Working Capital requirements
  2. General corporate purposes.
  • The issue type was Book Built issue
  • Face value: Rs.10 per share
  • IPO Price: Rs.305 – Rs.306 per share
  • Market lot: 49 shares
  • Its total issue size was 600 Cr
  • IPO issuing date was 5th October 2020
  • The current market price of the stock is Rs. 359.5(17.48%)

Chemcon:

Booming IPO & Its Impact on the Stock Market

Chemcon Speciality Chemicals Ltd is a manufacturer of specialized products i.e. HMDS and CMIC. Chemcon is a leading manufacturer of Pharmaceutical chemicals and generates maximum revenues from this particular segment.

Objectives of the IPO:

  1. To meet capital expenditures for expansion of manufacturing facility.
  2. To meet business working capital requirements.
  3. To meet general corporate purposes.
  • The issue type was Book Built issue
  • Face value: Rs.10 per share
  • IPO Price: Rs.338 – Rs.340 per share
  • Market lot: 44 shares
  • Its total issue size was 318 Cr
  • IPO issuing date was 1stOctober 2020
  • The current market price of the stock is Rs. 432(27.05%)

CAMS:

Computer Age Management Services (CAMS) Ltd is a technology-driven financial infrastructure and service providing company. CAMS offers technology-based services that include dividend processing, transaction origination interface, payment, transaction execution, dividend processing, intermediary empanelment, report generation, investor interface, settlement and reconciliation, compliance-related services, and brokerage computation.

Objectives of the IPO:

  1. To carry out the offer for sale of up to 18246600 equity shares by the selling shareholders
  2. To gain the benefits of listing on the Stock exchange.
  • The issue type was Book Built issue
  • Face value: Rs.10 per share
  • IPO Price: Rs.1229 – Rs.1230 per share
  • Market lot: 12 shares
  • Its total issue size was 2244.33 Cr
  • IPO issuing date was 1stOctober 2020
  • The current market price of the stock is Rs. 1512(22.92%)
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In the end, we can conclude by saying that there is a strong relationship between the IPO market and the Secondary market. The IPO market is the foundation of stocks in the secondary market.

The process which exists in the issuance of new shares is bound to affect the operation of the secondary market. To prevent the sharp drops in the short term of the equity market, IPO primary market and secondary market trading interdependent to each other.

The issuances of new shares in the IPO market will impact the market supply and demand for funds, and then have some effect on the secondary market. From the above results, we can see that the influence of the IPO single factors to the secondary market is bound to a certain limit as there are various factors too that affect the stock market like Economic conditions, news related to any industry or Sector, Technical analysis, etc.

In general, IPO markets are dependent on Secondary markets. If the market is going on uptrend companies try to list on the Stock Exchange and if the Market is performing well then only the investors will show interest to invest in IPOs. So this was the article on Booming IPO And Its Impact on Stock Market.

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