IPO Market Hots Up After Stellar Show by Snowman Logistics

The success of Snowman Logistics' public offer has brought back the focus on primary markets. A robust primary market helps companies to raise low-cost money but also gives an opportunity to investors to make good returns.

Investors were allotted shares of Snowman Logistics, an integrated logistics player, at Rs 47 apiece in the public offer and on its market debut, the stock rose to Rs 78, giving a phenomenal one-day return of 70 per cent. (Read more: Snowman Logistics Shares Soar 70% on Market Debut)

Last month, the issue was oversubscribed nearly 60 times and even the quota of retail investors got subscribed 41 times indicating that small investors have started coming back to stock markets.

And why not! India's bluechip indices - the Sensex and Nifty- have gained nearly 30 per cent year-to-date on the back robust foreign flows, which have totaled $14 billion so far in 2014. Gold prices are on the decline and as the economic growth rebounds, risk appetite will increase, helping stocks.

This is clearly visible in the primary markets, where interest seems to be coming back in a big way. Sharda Cropchem, which launched its initial public offering (IPO) earlier this month, got oversubscribed around 60 times by September 9, when the issue closed. In the retail segment, the IPO was subscribed 6 times. In April, amusement park operator Wonderla Holidays' IPO was oversubscribed 38 times.

September will be a big month for IPOs. Media firm Shemaroo Entertainment plans to raise about Rs 150 crore, while apparel retailer Monte Carlo Fashion's Rs 500-crore IPO is also likely to hit the market during the month. If these two IPOs manage to trigger investor appetite then September will probably be the best month for the IPO market since December 2012 in terms of the number of offerings. Companies like Lavasa Corporation and Adlabs Entertainment have also sought regulatory approval to launch their IPOs in the near future.

Even corporates have hit markets in a big way to raise capital. Indian companies have raised near Rs 50,000 crore in equity, predominately through QIPs and block trades, over the last few months. On an average, a little over Rs 6,000 crore has been mobilised every month through equity issuances in listed companies, according to analysts' estimates.

The government, too, wants to make the most of a bullish market. Earlier this week, it approved a share sale of over Rs 40,000 crore. (Read more: Cabinet Clears Stake Sale in ONGC, Coal India, NHPC)