Consumption To Technology: Systematix’s Nikhil Khandelwal Shares Sectors To Watch Out For In IPO Segment
Khandelwal expects a “fair bit of action” in the pharma and health care sectors as well in the primary market in the coming months.
India’s initial public offering (IPO) market stands out for its sectoral diversity, offering investors choices across a wide range of companies, according to Nikhil Khandelwal, Managing Director (MD) of Systematix Group.
On being asked about which will be the big themes driving IPO activity over the next three to four months, he picked consumption, technology and financial services.
“In terms of volume of activity, the most will be consumption, technology and financial services. There will be a fair bit of action in pharma and health care because that sector has become extremely invested and owned by private equity funds. The industrial sector will also continue to see a significant amount of deal action,” he said in a conversation with NDTV Profit.
He noted that financials remain an “evergreen” space and cited the listing of Tata Capital as a major upcoming float.
For retail investors navigating the busy primary market, Khandelwal offered a word of caution.
“Seeing the quality of the anchor investors should be one very big benchmark of the kind of companies they want to invest in. Avoid a lot of smaller IPOs. It's better to be invested in larger floats with the higher quality institutional investors who come through an anchor book,” he said.
He further advised retail investors not to be swayed by grey market premiums (GMP).
“Don’t just go by the grey market premiums, which kind of tend to give you a very different perspective from what may be the reality.”
Mutual funds, which channel a significant portion of retail money into IPOs, have become more selective.
"We are seeing that IPOs more than Rs 600, Rs 700, Rs 800 crores in size are the only ones now seeing mutual fund action," Khandelwal noted. Smaller issues are increasingly being picked up by Alternative Investment Funds (AIFs).
However, with a flood of new listings, concerns about the quality of companies coming to market, the proverbial ‘daal mein kankar’ (a stone in the lentils), are inevitable. While acknowledging that some lower-quality issues are bound to slip through in a buoyant market, Khandelwal emphasised the unique strength of India’s IPO landscape.
"The important feature of our market is that the floats which are coming out are probably the most diversified in terms of sectors. Unlike the US market, which is driven by tech, or China, which is mostly government-owned businesses, in India, you get to pick into companies like Lenskart, HDB Financial Services and JSW Cement,” he said.
