These two companies will be releasing their IPOs (Public Issue) soon. But…

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Is there a rebound in Indian IPO markets?

This morning on my way to the office, I turned the corner and saw a large red billboard on top of a hotel.

I had to wait at a traffic light, and then I saw the same billboard on top of five other hotels.

All signs had one entry, ‘OYO’. What started as a part-time activity has grown into a full-fledged business empire.

Ritesh Agarwal came up with the idea of ​​OYO (On Your Own) Rooms when he was 19 years old, and at 19 years old I was still wondering what professional course to take.

Agarwal became the youngest billionaire in India. He has always been an inspiration to me and I love the business idea of ​​OYO.

While flipping through some financial dailies, I came across a few articles stating that the company will be making an initial public offering (IPO) soon.

After a moderate wait, some big names will roll out their first public offerings throughout the rest of this year.

In addition to OYO, there is another company – Inox Green Energy – whose company I find interesting and it will also go public very soon.

Let’s take a closer look at the IPO details of both companies.

Stainless Steel Green Energy IPO

CEO of Inox Wind, Kailash Lal Tarachandani, recently said in an interview that Inox plans to launch Inox Green Energy IPO in the next 35-40 days.

This could mean that Inox Wind will release its IPO in October 2022.

Inox Groene Energie is a subsidiary of Inox Wind. It is engaged in providing long-term operation and maintenance (O&M) services for wind farm projects, especially for wind turbine generators (WTGs) and common infrastructure facilities on wind farms, which support the discharge of power from such WTGs.

The CEO said Inox Green Energy is growing as much as 30-40 percent annually. The company is currently operating with a volume of Rs 1.6 billion. In the next 3-4 years, this would increase to Rs 4-5 billion.

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The company submitted its draft red herring prospectus (DRHP) in June 2022. Incidentally, this was not the first DRHP submitted by the company. It had even filed a DRHP in February 2022, but it withdrew without explanation.

According to the latest submitted DRHP, the proposed offer will be Rs 7.4 billion.

50 percent of the total offering will be made up of new shares, and the remaining 50 percent will be on an offer for sale (OFS) basis.

Last week, the company received approval from the market regulator to proceed with the IPO.

Investors are waiting with bated breath as this IPO could mean diversification into the renewable energy segment for them.

And we all know the deep love the market has for the term ‘green energy’.

So this could be an exciting IPO to watch out for.

OYO Rooms IPO

OYO Rooms, also known as OYO Hotels & Homes, is an Indian multinational hospitality chain of rented and franchised hotels, residences and living spaces.

Founded in 2012, OYO initially consisted mainly of budget hotels. As of January 2020, it has more than 43,000 properties and 1 million rooms in 800 cities in 80 countries.

OYO submitted its DRHP in October 2021. Shortly after, however, the massive market correction started and because of that gray cloud hovering over the Indian IPO market. Therefore, OYO did not proceed with the offer.

But the scenario has now changed. OYO intended to reap the benefits of this changed scenario and on September 19, 2022, OYO filed an addendum to its existing DRHP.

According to the DRHP, the proposed IPO will be Rs 84.3 billion. Of the total offering, shares worth Rs 70 billion will be new shares, and shares worth Rs 14.3 billion will be on an OFS basis.

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In the filed addendum, the company reported total revenue of Rs 14.6 billion. For the first time, OYO reported positive EBITDA. It reported an EBITDA of Rs 70 million. The company’s losses narrowed, but this is the first time it has reported profits.

However, the company has reported a net loss of Rs 4.1 billion.

The gross booking value per hotel stood at Rs 3.3 lakh for the quarter ended June 2022. It is up 47 percent year-on-year.

The company has not yet received a response from the regulator.

This could be another exciting IPO to watch out for as the scenario for the hospitality and hotel sector has changed.

Hotel stocks are booming and most companies have had good results in the first quarter.

Now both companies have made big plans to go public, but is now the right time? Especially given the recent turbulence in the IPO market?

This could spoil the IPO buzz

It seems that Virat Kohli’s bad luck isn’t just limited to the cricket pitch. It has also followed him on the financial markets. Earlier this week, the Virat Kohli-backed Go Digit General Insurance IPO was suspended by the market regulator.

The proposed IPO offering is expected to raise Rs 12.5 billion through issuance of new shares and the remainder would be raised by selling 109.4 million shares from promoters and existing shareholders.

This move by the regulator raises the question of companies’ decision to go public in the current market scenario.

Newly listed Tamilnad Mercantile Bank IPO opened at a huge discount and yet its share price continues to fall.

Investors tried to regain confidence in the Indian IPO markets, but the discounted listing of the Tamilnad Mercantile Bank and the market regulator who blocked the IPO of Go Digit Insurance have dampened IPO activity.

Indian IPO Markets Revive, But…

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The Indian IPO market was already under pressure from market volatility. The markets have corrected and investors are still cautious.

Investors are still reeling from Paytm and Zomato’s losses. What gets worse is LIC’s falling share price. Investors had applied en masse for the mega IPO of LIC.

When these companies came out with IPOs, investors thought they would be the next big multibagger stock. But unfortunately that didn’t happen. Shares were badly beaten on the stock exchanges.

Now investors are very cautious about loss-making companies. No matter how good a company is, investors may not trust it if they can’t show profit capacity.

Companies understand this all too well. Investors raised several red flags before investing in an IPO. Hence, many companies are reluctant to go public with IPO even if their IPOs have been approved.

Currently, the company with urgent financial needs is opting for private financing due to the uncertainty in the market.

Leading pharmacist PharmEasy, for example, withdrew its offer, citing market conditions and strategic issues. The company said it is raising money through the rights issue.

On the other hand, companies’ Q1 results showed some optimism as many companies reported good quarterly numbers.

Broader markets also traded positively over the past month. Investors were again looking for the best small-cap stocks to buy and the best mid-cap stocks before the holiday season kicked in.

All this has boosted investor confidence, which is why they are also looking for new businesses.

But how IPO activity plays out in the rest of this year remains to be seen.

For more information, check out the upcoming IPOs on our website.

Disclaimer: This article is for informational purposes only. It is not a stock recommendation and should not be treated as such.

This article is from Equitymaster.com.

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