Five major companies have now received approvals from capital markets regulator Securities and Exchange Board of India (SEBI) to raise funds via initial public offerings (IPOs). According to SEBI's update on Monday, September 30, supermart major Vishal Mega Mart, renewable energy firm ACME Solar Holdings, packaging equipment manufacturer Mamata Machinery, auto major Hyundai Motor India, and food delivery giant Swiggy Ltd have received SEBI's approval to raise funds by floating their IPOs.
According to SEBI, the issuance of an observation letter on the IPO draft paper documents implies that a company can launch its initial share sale within the next one year from the market regulator's receipt of letter.
According to SEBI's latest processing status, the market watchdog issued observation letter to Swiggy Ltd and Hyundai Motor India on September 24, 2024 and Vishal Mega Mart on September 25, while ACME Solar Holdings, and Mamata Machinery received the observation letters on September 27, 2024. On the other hand, SEBI returned the draft papers of manpower services company Innovision, whose proposed IPO was a mix of fresh issue of shares worth ₹315 crore and an offer for sale (OFS) of 11.81 lakh shares.
Hyundai Motor India Ltd, the Indian subsidiary of South Korea's Hyundai Motor Company, is expected to raise ₹25,000 crore, making it the largest-ever IPO in India, planning to hit the market before Diwali.
Hyundai Motor is the second largest carmaker in India after Maruti Suzuki India. In comparison to Maruti Suzuki, Tata Motors, and other competitors, Hyundai Motor India is thought to be stronger as a result of the listing since it may make financing in the future simpler even though the company is not going to utilize the IPO proceeds directly for the company.
Market experts say Hyundai's IPO offers potential value growth by expanding investment prospects in the underdeveloped Indian auto market. “The business's stated RoNW for FY23 was 23.48 per cent, the highest among its peers. This indicates that the company is making good use of the money provided by shareholders to create profits,” said domestic brokerage firm Master Capital Services Ltd.
“From fiscal 2019 to 2023, the PV industry saw strong growth, with a healthy 11 per cent CAGR in industry value driven by an eight per cent CAGR in average vehicle prices and a three per cent CAGR in total sales volumes and Hyundai is well positioned to take advantage of this growth due to their diverse offerings within the industry compared to its peers which exhibit varied financial metrics, highlighting diverse market strengths,” it added.
Also Read: IPO frenzy: Hyundai, Swiggy, NTPC Green Energy, among others, to raise ₹60,000 crore in 60 days
The Swiggy IPO is a combination of fresh issue of equity shares worth ₹3,750 crore and an OFS of 185,286,265 equity shares by the existing shareholders. The IPO includes segments for qualified institutional buyers (QIBs), anchor investors, and mutual funds. Swiggy’s IPO will see some early backers, such as Accel, Prosus, and Tencent, selling part of their stakes, offering the potential for significant returns.
Going by SEBI's update on Monday, Vishal Mega Mart took the confidential filing route to submit its draft papers in July with the markets regulator, keeping details undisclosed for the time being. It obtained the regulator's observations on September 25. Under the confidential filing process, SEBI reviews confidential DRHP and provides comments on it.
Thereafter, the company going public is required to file an update to the confidential DRHP (UDRHP-I) after incorporating the regulator's comments. This UPDRHP-I is made available for public comments over 21 days. Finally, after incorporating the changes due to public comments, the company is required to update the DRHP-II (UDRHP-II).
Also Read: Vishal Mega Mart IPO: Kotak Mahindra Bank and ICICI Bank picked for $1 billion IPO - Report
Gurugram-based ACME Solar Holdings and Mamata Machinery got SEBI's observations on September 27 to launch their respective IPOs. The regulator received the draft papers of both companies in July. In SEBI's parlance, its observation means go ahead to float the public issue.
ACME Solar Holdings' proposed IPO is a combination of a fresh issue of shares worth ₹2,000 crore and an OFS of shares valued ₹1,000 crore by ACME Cleantech Solutions, according to the DRHP. The proceeds from the fresh issue will be used for debt payment and for general corporate purposes.
Gujarat-based Mamata Machinery's initial share sale is entirely an OFS of 73.82 lakh equity shares by promoters. Those selling shares under the OFS are Mahendra Patel, Nayana Patel, Bhagvati Patel, Mamata Group Corporate Services LLP, and Mamata Management Services LLP.
India's IPO market is thriving with 62 companies, including Bajaj Housing Finance, Ola Electric Mobility and FirstCry's parent Brainbees Solutions, having already mobilised around ₹64,000 crore collectively via mainboard in this year so far. This marks a 29 per cent increase from ₹49,436 crore collected by 57 firms through the route in the entire 2023.
