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Now, an IPO deluge. Another bubble building up?

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Adani Power IPO has provided the much needed relief to the capital markets. Not yet, since it is not listed but it was oversubscribed. Suddenly the gray markets of Gujarat are buzzing and the IPO’s are back to the premiums days.

NHPC a PSU power company which generates electricity from water has hit the IPO market this week looking for $1.25 bn. It is over subscribed in the first 1 hour of its opening.

ipo bubble

In a real filmy style, it took a Reliance Power to sink the IPO market and it took a Mahindra Holidays to revive the market. We are always on the look out for leaders aren’t we? What we are seeing now is a deluge of IPO’s.

Oil India is coming up with its IPO on September 7. Many other PSU’s are waiting in the wings – either looking for approvals or waiting for the right time.

DEN Network, Lodha Developers are 2 other names which were doing the rounds to tap primary market. Buoyed by the surge in stock market other Infrastructure and textile companies are lining up for their IPOs.

As per the ASSOCHAM estimate infrastructure and textile companies are looking to raise 16000 crores through IPO’s.

Taking a cue from the upsurge in the stock market, companies in infrastructure, textiles and other sectors are planning to raise over Rs 16,000 cr through an initial public offer in the remaining months of this fiscal, Assocham said in its study.

Is this irrational exuberance all over again or is it the India growth story continued…?

It is hard to say that this is not a bubble. At the same time it is hard to ignore that this is a cycle. Right now we are in the rising leg. That is anybody’s guess. Only thing which many cannot predict is – when will it end?

I started following the markets in 2005 and I am lucky enough to see one full cycle already. If you are like me then you are lucky too because this is something which we have read in books. Now, you can write one. If you are starting out then let me warn you. The cycles were longer earlier. But now the cycles will be shorter.

So, there might be yet another Reliance Power lurking here. But you have a choice. And that is – Minesweeper vs IPO’s.

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