BOMBAY, 19 January 2004 — The Indian stock market is caught in a tight bull grip. The Sensex has gone to heights where it has never gone before. Many stocks are ruling at new highs. And when the secondary market soars like this, it is expected that the primary market or the initial public offerings (IPOs) also soar.

Yet, the IPOs have not been able to perform as well as the secondary markets. The year 2003 has been good but not as good as the secondary markets performance. According to Prithvi Haldea of Prime Databse, in 2003, there were only 15 public issues and they all together managed to raise Rs.21.94 billion. But one can take solace from the fact that 2003 was better than 2002, which had seen only 6 issues raising Rs.1,9.81 billion. Undoubtedly, the best year till date, for the IPOs has been 1995 when it managed to raise a whopping Rs.138.87 billion.

Infact many issues hit the market only in the third quarter ending December 2003. The quarter was fruitful compared to the previous quarter ending September 2003 as it raised Rs.5.69 million from four IPOs, as against Rs.5.32 billion from five IPOs in the previous quarter. UCO Bank, IOB, Vijaya Bank, Weal Infotech, Indraprastha Gas and TV Today were the major issues.

Over-subscription formed another significant feature of the IPO market in the December quarter. Three out of the four IPOs floated during the quarter were over-subscribed. Vijaya Bank IPO was oversubscribed 17.5 times, Indraprastha Gas issue was over-subscribed 20 times, while the TV Today IPO was subscribed a whopping 36 times.

The quarter also witnessed some IPO cancellations. LG Electronics India, which had earlier indicated its intention to come out with an IPO, deferred its plan by a few years, while coffee conglomerate Amalgamated Bean Coffee Trading Company (ABCTC) also deferred its plans of going public.

This has been the report card of the year that has gone by. Many exciting IPOs have been lined for 2004. According to the latest figures with Securities and Exchange Board of India (SEBI), around 600 companies have filed in their papers to raise money via the primary market. And they all together are expected to raise over Rs.500.00 billion.

Prominent amongst them is Public Sector Undertakings like National Thermal Power Corporation (NTPC) and Power Finance Corporation (PFC). CMC, IBP, IPCL, ONGC and GAIL are all expected to tap the market in 2004.

There are many banks like Central Bank of India, Punjab and Sind Bank and Bank of Maharashtra which have also envinced their interest to raise money.

Big companies like TCS, UTV, Secure Meteres, NDTV, Bicon, Hyundai, Surya Pharmaceuticals and Patni Computer Systems are also expected to tap the primary markets this year.

“The sustained bull run in the secondary market and huge returns offered by almost all the IPOs that have hit the market in the recent past, are now making investors relook at equities, Prime Database said in its recent reports. But given the risk which the investors have undertaken due to the “vanishing act” of various companies in the past, it is quite clear that investors will now invest only in companies which are established and that too, if offered at a reasonable price.

Market analysts say that the IPO boom can be even more greater but for some glitches which have to be smoothed out.