5 Big IPOs to Look Forward to in 2021 - Views on News from Equitymaster

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5 Big IPOs to Look Forward to in 2021

Jun 19, 2021

As the nation gets vaccinated gradually and lockdown restrictions ease, the second half of 2021 will be an action-packed one for the IPO market.

Here's a list of the upcoming IPOs that are lined up to hit the primary market in the latter half of 2021.

Zomato

Zomato, one of India's favorite food tech company, is all set to go public. The Indian restaurant aggregator and food delivery company was founded by Pankaj Chaddah and Deepinder Goyal in 2008.

The company filed the draft of the Red Herring Prospectus with the market regulator in April 2021 proposing an offer to raise Rs 82.5 bn.

The first half of the offer will be for Qualified Institutional Buyers (QIBs), the next 35% will be for retail investors, and the remaining 15% for Non-Institutional Investors (NII).

The company has been valued at Rs 530 bn. Even though the valuations look attractive to some, others find it pricey.

Zomato is still a loss-making company. For the previous financial year, it had an income of Rs 27 bn and an expense of Rs 49.1 bn. Yes, that means a massive net loss.

So why is there such hype about its IPO?

Co-head of research at Equitymaster, Rahul Shah did a detailed analysis of Zomato and explained the reason behind the hype.

You can read about it here:

Zomato IPO: A True Wealth Creator or a Speculative Bet

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Paytm

Paytm is one of India's leading digital service providers. It is expected to raise Rs 218 bn as per market speculation.

Once this news was out, the price of the unlisted shares of the company jumped by 70% in the grey market.

The Paytm IPO is suspected to be the biggest in the IPO history of India. It is likely to surpass Coal India's IPO of 150 bn, which is the biggest in Indian history to date.

The leading digital payments service provider is backed by SoftBank and Alibaba.

Details such as the date of issue and the price band have not been announced yet.

Speaking of the Paytm IPO, here's what Richa Agarwal, lead small cap analyst at Equitymaster, wrote in of the recent editions of Profit Hunter: Paytm IPO: Will it Deliver Profits?

  • I'm a big admirer of these companies as a consumer.
    However, looking at them through an investor's lens, I'm skeptical. These successful disruptors aren't anti-fragile themselves.
    In a world of cheap money and deep pocketed private investors willing to burn cash on promising ideas, they are facing brutal competition.
    Their only chance of survival is their ability to raise more money. Hence the IPOs.

Free Signup: The Smallcap Revival Summit

GoAir

With the second wave of Covid 19 hitting the country hard, there has been an abrupt pause in the travel industry which has affected the revenues of airlines majorly.

As the second wave ebbs, and restrictions ease, there is hope for the airline industry to get back on track.

GoAir is expected to raise Rs 36 bn via an IPO. The company has a debt of Rs 17.8 bn and aims to repay it with the net proceeds of the IPO.

The IPO is expected to get a clearance from the market regulator by July end. It will open in August 2021.

Half of its offer will be extended to QIBs, the next 35% to retail investors, and the remaining 15% to NIIs.

The company has rebranded itself as Go First for its IPO preparation.

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Life Insurance Corporation (LIC)

Finance Minister of India Nirmala Sitharaman announced Life Insurance Corporation of India's IPO in the Union Budget 2021.

She said that LIC's IPO will be closed in the financial year 2021-22.

The issue size of the IPO is expected to be in the range of Rs 700 bn-800 bn. Yes, it's massive.

The pre-IPO process of the company is already underway. According to the Department of Investment and Public Asset Management (DIPAM), the IPO can be expected in the third or fourth quarter of the financial year.

Co-head of research at Equitymaster, Tanushree Banerjee recently did a detailed analysis of LIC's IPO in her editorial.

Here's what she had to say -

  • The insurer still has over 70% share of all life insurance policies sold in the country.
    And its assets under management stood at Rs 31 tn in 2020.
    These facts alone make the IPO very enticing apart from its potential size.

Nykaa

The lockdown has provided a necessary tailwind to the e-commerce sector which has resulted in a significant increase in sales, customer base, and revenue.

Founded by the former investment banker Falguni Nayar, Nykaa will keep the size of the offering between Rs 37 bn - Rs 52 bn.

The company has appointed Kotak Mahindra Capital and Morgan Stanley as its IPO managers.

FSN e-commerce ventures, the holding company of Nykaa, will file its draft red herring prospectus by June-end or early July, and the IPO is expected to open in the March quarter of this financial year.

The beauty platform has a lot of room to grow in the personal care and beauty products space.

Even though the issuer hasn't finalized the offer size and the IPO dates, Nykaa's IPO isn't far away.

To know more, you can check out the current and upcoming IPOs on our website.

Final Word

The pandemic had adversely affected the December and March quarterly results of companies in 2021, keeping a whole line of upcoming IPOs on hold.

Come 2021, an approximate of 30 companies have filed their draft red herring prospectus (DRHP) with the market regulator to get the certifications and permissions and go public as soon as possible.

This will create a wide number of investment opportunities for investors. You, the investor, needs to keep an eye on the high potential IPOs and invest early if you want higher profits.

And yes, you need to avoid the IPOs that do not present a strong investment proposition.

Whenever one is investing in an IPO, one should weigh in all the positive and negative factors affecting the company.

Taking a close look at the company's financials and valuations would help in making better investment decisions.

Happy Investing!

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