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The Securities and Exchange Board of India (Sebi) has appointed G Ram Mohan Rao as Executive Director (ED) for three years. Rao will be handling the investigation department and the internal inspection department. He has been with the markets regulator for over 25 years during which he has supervised diverse portfolios such as inspections, litigation, recovery, investor awareness, grievance redressal, etc. Before the appointment, Rao was the regional director of the Eastern Regional Office of Sebi.

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The average initial public offering (IPO) size in 2023 shrank to Rs 867 crore from Rs 1,483 crore in 2002 and Rs 1,884 in 2021, according to a report by Prime Database. The average IPO size declined as the year was dominated by smaller-sized issues.

“The average issue size is in line with the pre-pandemic figures. In between, some issuances from new-age companies came and skewed numbers. In the next year, we will have new-age companies coming back, and the average ticket size could go up,” said Ajay Saraf, executive director of ICICI Securities.

The report said 57 companies raised Rs 49,434 crore in 2023 through IPOs, 17 percent lower than the previous year’s Rs 59,302 crore raised by 40 IPOs. However, if one excludes the mega LIC IPO, which came out in 2022, IPO mobilization increased by 28 percent from last year. The public equity fundraising (IPOs+ OFS+INVITs+QIPs) rose 59 percent to Rs 1,44,283 core in 2023 from Rs 90,886 crore in 2022.  

The largest IPO in 2023 was from Mankind Pharma (Rs 4,326 crore). It was followed by Tata Technologies (Rs 3,043 crore) and JSW Infrastructure (Rs 2,800 crore). The smallest IPO was from Udayshivakumar Infra, raising Rs 66 crore, followed by Plaza Wires, Rs 71 crore.  

Forty of the 57 IPOs came in four months of the year. September had the highest number of IPOs, with 14 issues hitting the market, followed by 11 issues in December, eight in November, and seven in August.

Forty-one out of the 57 IPOs were subscribed more than ten times, 16 were subscribed more than 50 times, and nine IPOs were subscribed more than three times. The rest of the issues were subscribed to anywhere between 1 and 3 times. The number of applications from retail investors increased to 13.21 lakh in comparison to 5.6 lakh in the previous year. The highest number of retail applications was received by Tata Technologies (52.1 lakh), followed by DOMS Industries (41.3 lakh) and INOX India (37.3 lakh).

Pranav Haldea said the IPO response was further buoyed by strong performance post-listing.

“Of the 57 IPOs, 40 gave a return of over 10 percent. 53 of the 57 IPOs are trading above issue price,” said Haldea.

Twenty-one out of the 57 IPOs that hit the market had a prior private equity or venture capital (PE/VC) investor who sold shares in the IPO. Offers for sale by such PE/VC investors at  Rs 10,968 crore accounted for 22 percent of the total IPO amount. Offers for sale by private promoters at Rs 15,196 crore accounted for another 31 percent of the IPO amount.

The amount of fresh capital raised in the IPOs in 2023 was the highest in seven years at Rs 20,662 crore.

The year also saw 87 companies filing their offer document, while 40 companies decided to let their approvals lapse.

Regarding the outlook for next year, the report said 27 companies are proposing to raise Rs 28,500 crore and are holding Sebi approval, and another 36 companies looking to raise Rs 40,500 crore are awaiting the regulator’s nod.

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Shares of Adani group companies continued to hold gains in intra-day deals on Wednesday after the Supreme Court granted the market regulator, Sebi, three more months to complete its investigation. The Supreme Court, on Wednesday, said that there were no grounds for taking away the investigation of the Adani group of companies in the Hindenburg report from the markets regulator. It granted the Securities and Exchange Board of India (Sebi) three months to complete the investigation of two pending matters.

The Court also said that the Centre and Sebi will look into whether Hindenburg Research has violated the law on short-selling. Earlier in the day, shares of Adani group companies rallied up to 12 percent on the BSE in Wednesday’s intra-day trade as the Supreme Court is expected to announce its verdict in the Adani-Hindenburg case.  

Among individual stocks, Adani Energy Solutions surged 12 percent to Rs 1,193.05, while Adani Total Gas soared 10 percent to Rs 1,100, followed by Adani Green Energy (9 percent at Rs 1,740), New Delhi Television (9 percent at Rs 296), Adani Wilmar (7 percent at Rs 391), Adani Enterprises (6 percent at Rs 3,094.85), Adani Power (5 percent at Rs 544.65), Adani Ports And Special Economic Zone (4 percent at Rs 1,117.10), Ambuja Cements (2 percent at Rs 541.45) and ACC (2 percent at Rs 2,305). In comparison, the S&P BSE Sensex was down 0.23 percent at 71,723 at 09:311 AM.

Adani Enterprises in its FY23 annual report said that a US-based short seller report was a combination of targeted misinformation and outdated, discredited allegations aimed at damaging the reputation and generating profits through a deliberate drive-down of the group firms stock prices.

“Even though we promptly issued a comprehensive rebuttal, various vested interests tried to exploit the claims made by the short seller opportunistically. These entities engaged and encouraged false narratives across various news and social media platforms,” Adani group’s flagship company said.

Consequently, the Hon’ble Supreme Court of India constituted an Expert Committee to investigate this matter. It comprised individuals known for their independence and integrity. The report of the Expert Committee was made public in May 2023. The expert committee in its report had found no prima facie lapse on the part of the Securities and Exchange Board of India (SEBI) in the matter.

While reserving the verdict, the Supreme Court had said it has no reason to “discredit” SEBI, which probed allegations against the Adani group, as there was no material before it to doubt what the market regulator has done and the court does not have to treat what was set out in the Hindenburg report as a “true state of affairs”.

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Shares of Lemon Tree Hotels surged 9 per cent on the BSE to hit a record high of Rs 129.30 in Tuesday’s intra-day trade amid heavy volumes driven by expectations of strong earnings.

In comparison, the S&P BSE Sensex was down 0.43 per cent at 71,958 at 09:56 AM.

The stock surpassed its previous high of Rs 126.80 touched on September 15, 2023. The average trading volumes on the counter more than doubled today.

A combined 17.23 million equity shares, representing 2.17 per cent of total equity of Lemon Tree, changed hands in the first 40 minutes of trade on the NSE and BSE.

Lemon Tree Hotels (LTHL) is one of the largest hotel chains in India on the basis of controlling interest in owned and leased rooms, the sixth largest by consolidated inventory, and the largest in the mid-market hotel sector.

LTHL operates across the upscale, upper-midscale, midscale and economy segments, and delivers differentiated yet superior service offerings, with a compelling value proposition.

According to the management, the outlook for LTHL remains promising with healthy occupancy rates and higher average room rates (ARRs).

As the economy revives, the management anticipates a sharp demand rebound and as the largest branded hotel player in the mid-segment, the company is well positioned to benefit and gain market share, it said in the FY23 annual report. 

Brokerage Motilal Oswal Financial Services (MOFSL) expects strong momentum for Lemon Tree Hotels to continue going forward, led by further improvements in occupancy and ARR on resilient demand and a boost from recently opened convention centers in key markets.

An increase in ARR with the addition of Aurika Sky City Mumbai and room renovations and addition of hotels under management contracts will aid this, it said. 

LTHL has established a niche for itself in the growing mid market hospitality segment and is now expanding its wings by improving its presence in the top (upscale/luxury) segment and increasing its inventory through management contracts. MOFSL thus believes it will benefit significantly from the sectoral tailwinds and emerge as a larger and stronger player.

“The company is expected to benefit from the changing dynamics in its key markets such as NCR (24 per cent/17 per cent of FY23/FY26E consolidated revenue as per our estimates) and Mumbai (excluding Aurika Sky City, (10 per cent in FY23 and 29 per cent in FY26 including Aurika MIAL),” its report read. 

Rising demand in these cities and slower supply (2-6 per cent CAGR over FY23-28E) should propel the growth trajectory of existing players, the brokerage said. It maintained a buy rating on the stock with a target price of Rs 150.

Key risks to rating and estimates are decline in business/MICE activity leading to adverse impact on occupancy and ARR, any negative impact on the tourism/travel sector, inability to ramp up Aurika Sky City Mumbai due to lower-than-expected traction in the Mumbai market, it noted.

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Indian equity mutual funds have seen equity inflows of Rs 1.6 trillion so far in the first eleven months of calendar year 2023 and brokerage Kotak Securities does not see any major event that can shock retail investors and curtail flows in 2024. Here are a few fun FAQs answered by the brokerage.

What will the market do in 2024?

The returns in 2024 will depend on the tussle between fundamentals and sentiment. In an entirely ‘fundamental’ market, returns will likely be modest for the market and negative for many stocks. A bottom-up plug-in of our 12-month FVs for individual stocks shows a modest 1 per cent upside for the Nifty-50 Index.  In a less-than-fundamental market, market returns can vary, as it is impossible to factor in sentiment in any market calculus.

What will result in a market correction?

Any market correction will be entirely based on a big change in the market’s expectations of potential returns. “We have no idea though as to what will change the market’s bullish return expectations, which have been reinforced by

the stellar returns of the past three years for ‘new’ retail investors. We can point to a few fundamental factors, such as (1) earnings downgrades (although earnings misses are passe in the current state of irrational exuberance) and (2) higher-than-expected interest rates (unlikely). Increased focus on fundamentals versus flows may result in a correction, but we wonder why investors ask this question but stay invested,” said the brokerage.

What will stop retail flows?

Kotak Securities does not see any major event that can shock retail investors and curtail flows. Domestic (decent macro-economic situation) and global (lower interest rates) factors are supportive. The Indian market has seen a significant correction on (1) extreme valuations (2001, 2008) or (2) domestic or global shocks (2004, 2016-17, 2020). “We find this obsession of institutional investors with retail flows quite fascinating; we hope that “sophisticated” investors are not taking their cues from retail flows,” said Kotak Securities. 

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