IPO Review: The third week of September sees a continued frenzy of initial public offerings (IPOs), with approximately 9 IPOs hitting the D-Street. The momentum appears set to persist. Over the past few months, the Indian Primary market has shown strong momentum, with numerous public offerings attracting significant interest from investors. The continued enthusiasm for IPOs and strong subscription figures underlines the growing investor trust in the Indian IPO market. Reports indicate that in August, IPO fundraising reached a 27-month peak, with 10 companies raising around ₹17,047 crore. This marked the most active period for public offerings since May 2022.
Coming on to this week, along with a slew of small and medium-sized enterprises (SME) IPOs, there are three mainboard IPOs. Arkade Developers IPO and Northern Arc Capital IPO will be open for four days, starting from Monday, September 16, and ending on Thursday, September 19. The Western Carriers (India) IPO, which commenced on Friday, September 13, will also end on Thursday, as Wednesday, September 18 is a bank holiday.
In our discussions with market experts, it has become evident that the Northern Arc Capital IPO is the most favoured offering out of the three. Now, let's examine the viewpoint and rationale of the experts.
Arun Kejriwal pointed out that while he didn't fully comprehend the business of Arkade Developers, the anchor investors for the company seemed promising. He expressed disappointment with the anchor for Northern Arc Capital IPO, despite acknowledging that the company appears better than Arkade Developers. Regarding Western Carriers (India), Kejriwal mentioned that the issue seems small and is in a competitive industry. However, he expressed confidence that all three issues will sail through successful. In his opinion, Northern Arc Capital IPO seems the most favourable, followed by Arkade Developers IPO and Western Carriers (India) IPO.
Similarly, Mohit Gulati highlighted the initial public offering of Arkade Developers and stated that is another real estate company entering the market at its peak. It feels like a repeat of 2007.
“While their IPO is likely to be successful, I wouldn't hold onto the company beyond its listing day. I anticipate a slowdown in the real estate market as demand has leveled off in MMR. Given this trend, it will be challenging for Arkade to exceed estimates in the coming year,” said Gulati.
Talking about Western Carriers (India), Mohit said that the firm with a low single-digit profit after tax (PAT) margin have positioned themselves well to navigate through. From a listing perspective, this should be a decent offering and would recommend a ‘BUY’ here.
“Northern Arc is my top pick for this week due to several factors working in their favour. They cater to a challenging and highly lucrative market segment. Access to capital has always been a problem for the lower end of the Indian market, despite the intention to repay. Northern Arc has great potential to expand its loan portfolio by 5-10 times in the next 4-7 years. Valuations look attractive, and if NPA's stay low, this could be a sure multi-bagger to hold onto post-issue,” added Gulati.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
