Breaking free: 66 companies set to unlock $17.7 billion in shareholder lock-ins

Estimated read time 9 min read

Mumbai: With 66 companies expected to have their shareholder lock-ins worth $17.7 billion lifted between 1 April and 29 July, a wave of block deals is expected to hit the market, attracting bids from both domestic and international institutions, as well as high-net-worth individuals.

“The value pertains to total lock-up opening shares, but it’s important to note that not all the shares will come up for sale, as a sizable portion is held by promoter groups,” said Abhilash Pagaria, head, Nuvama Alternative and Quantitative Research.

Pagaria’s analysis, based on listings until 25 March, revealed strong investor interest for the initial public offerings (IPOs) of several companies. Tata Technologies led the pack with a staggering 69-fold oversubscription for its IPO, and witnessing a 140% surge in stock price above the issue price on debut.

Other notable examples include Indian Renewable Energy Development Agency (IREDA) with a subscription of 38.8 times, ESAF Small Finance Bank (77 times), Jyoti CNC Automation (40.5 times), and Inox India (61.3 times). Even Honasa Consumer, which saw a subscription of 7.6 times, witnessed significant investor interest.

“Not all of these blocks can easily get absorbed. Like in any deal making, there has to be meeting of minds of both buyers and sellers. Plus, there has to be a triangulation of the company being able to consistently perform on the basis of the expectations at the time of an IPO for an investor to build up their positions,”  said Bhavesh Shah, managing director and head, investment banking, Equirus. 

“While there have been strong inflows in the market, the stock sentiment also needs to to be supportive to get the trade done,” Shah added.

Nuvama’s analysis revealed the following IPO schedules: IREDA will offer 1.47 billion shares on 30 May, ESAF Small Finance Bank will offer 334 million shares on 9 May, Tata Technologies will issue 262 million shares on 27 May, Fedbank Financial Services will open for subscription with 180 million shares on 29 May, Honasa Consumer will offer 158 million shares on 2 May, Jyoti CNC Automation’s IPO with 159 million shares is scheduled for 11 April and 16 July, Muthoot Microfinance will issue 99 million shares on 24 June, and Inox India’s IPO with 51 million shares will open on 20 June.

“If we go with the previous data, whenever a company’s lock-in period gets over there is apprehension among the investors. This could lead to selling, but companies often avoid significant price drops because many investors have already booked profits, and are exiting their positions through negotiated deals,” Kranthi Bathini, director of equity strategy at Wealth Mills Securities Pvt Ltd, said.

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