IPO Frenzy Continues with 6 New Issues, 10 Listings This Week: Analysts Warn of Risks in SME Space

The Indian IPO market has witnessed a significant uptick recently, on the back of strong market sentiments and a robust macro environment. In August, 17 companies submitted their draft red herring prospectus (DRHP) with the SEBI, the highest number of monthly filings in more than a year. The ongoing week, starting today, September 2, will witness the launch of six initial public offerings (IPOs), including one mainboard segment IPO and five from the small and medium-sized enterprises (SME) segment. In addition to the IPOs, 10 companies are set to make their market debut this week.

In the mainboard segment, the Gala Precision Engineering IPO will open for subscription on September 2. The Baazar Style Retail IPO will close for subscription on September 3.

This week, SME segment IPOs including Jeyyam Global Foods, Mach Conferences and Events, Namo eWaste Management, and My Mudra Fincorp, will open for bidding.

Analysts expect that the IPO market will remain vibrant for the remainder of the year due to these favorable market conditions. “Recently listed IPOs have performed exceptionally well, boosting confidence among both companies and investors. This renewed optimism is prompting investors to look at opportunities in the primary market and driving promoters to raise funds through IPOs. Foreign investors also favour India's primary market for its potential for higher returns,” said Pantomath Capital Advisors Private Limited, Trusted Mid-Market Investment Bank.

While market experts cite positive market scenarios as a reason behind the vibrant IPO market, some experts also raised a sign of caution for investors planning to invest in the upcoming SME IPOs.

According to analysts, the recent surge in SME stocks and strong listing gains in some of the companies are largely due to three key factors including liquidity, FOMO effect and retail investors’ participation.

Vaibhav Porwal, co-founder at wealth management firm Dezerv says high market liquidity has fueled exaggerated price movements in smaller, less liquid SME stocks as investors chase high returns and disregard the underlying risk. In addition, the fear of missing out (FOMO) on quick gains has spurred continued investment in SME IPOs.

“While this trend might persist in the short term, risks like market corrections and regulatory interventions could temper the frenzy in the market. Investors should exercise caution and focus on fundamentals, as the SME stocks could correct sharply if sentiment shifts," Porwal said.

VK Vijayakumar, chief investment strategist at Geojit Financial Services says the irrational and hyper speculative activity in the SME segment is becoming a serious concern. IPOs of some SMEs without any track record and suspect financials are getting oversubscribed many times.

“Retail investors chasing such IPOs in hopes of getting listing gains has become an unhealthy trend. Irrational frenzies like these often end in tears for investors," he said.

Here’s a list of IPOs that will remain open for subscription this week:

Gala Precision Engineering IPO: The mainboard segment IPO will remain open for subscription from September 2 to September 4. This IPO is a book-built issue amounting to Rs 167.93 crore, including a fresh issue worth Rs 135.34 crore and an offer for sale (OFS) of Rs 32.59 crore. The price band for the Gala Precision Engineering IPO is set between Rs 503 and Rs 529 per share.

Baazar Style Retail IPO: The public issue opened for subscription on August 30 and will close on September 30. This IPO is a book-built issue valued at Rs 834.68 crore, consisting of a fresh issue of 0.38 crore shares worth Rs 148 crore and an OFS of 1.77 crore shares worth Rs 686.68 crore. The price band for the Baazar Style Retail IPO is set between Rs 370 and Rs 389 per share.

SME IPOs to watch for this week:

Jeyyam Global Foods IPO: The public issue of Jeyyam Global Foods opened for subscription on September 2 and will close on September 4. The SME IPO consists of a completely fresh equity sale of 1.34 crore shares. The company aims to raise around Rs 82 crore. The IPO is priced in the range of Rs 59-61 per share.

Namo eWaste Management IPO: The IPO will open for subscription from September 4 to September 6. The company aims to raise Rs 51.20 crore through an entirely fresh issue of 60.24 lakh shares at a price band of Rs 80-85 per share. Hem Securities Limited is the book-running lead manager for the IPO.

Mach Conferences and Events IPO: The maiden public issue worth Rs 125.3 crore will open for subscription on September 4 and close on September 6. Mach Conferences and Events specialises in conference management, exhibition management and global event planning. The IPO is priced in the range of Rs 214-225 per share. The company aims to raise Rs 50.15 crore through a fresh issue of 22.29 lakh equity shares, and Rs 75.13 crore through the offer for sale.

Naturewings Holidays IPO: The Kolkata-based tourism company’s IPO will open for subscription for three days from September 3 to September 5. The company aims to raise Rs 7.03 crore through the public issue of 9.5 lakh equity shares at a price of 74 per share.

My Mudra Fincorp IPO: The New Delhi-based company’s IPO will open on September 5. The company specialises in the distribution and sales of financial products as a channel partner. With a price band of Rs 104-110 per share, the company targets to raise Rs 33.26 crore at the upper price band.