2021 will go down in Indian history as the ‘year of IPOs’. An unprecedented 65 mainboard IPOs were launched in the year leading to huge valuations of startups and other established companies, and collectively raised over ₹ 1.2 L Cr. 2022 had started with equal zeal and enthusiasm in the Indian markets but global forces like the US Fed rate hikes and the military conflict in Ukraine led to a slowdown in the international market. While it doesn’t compare to last year, still almost 2 dozen IPOs have been launched this year to raise money from the primary market. While there are just a few more months left in the year, the market is seeing a renewed resurgence. This, clubbed with the festive season around the corner, is going to see a few more IPOs being launched. Out of these, here are the 3 big upcoming IPOs that you should look out for.

1. Go First (Go Air) IPO

Go First is a renowned ultra-low cost carrier airline in India. Prior to the onset of the pandemic, India was recognised as the faster growing aviation market in the world. However, since then the nationwide lockdowns, travel restrictions, and other apprehensions made a huge dent to the industry. So much so that Go First has become a debt laden company, at the moment. To repay this debt and for other expansion plans, Go First is aiming to go public. The intent is to raise around ₹ 3600 Cr from the primary market.

With a total flight inventory of more than 56 aircrafts, Go First serves 28 domestic and 9 international destinations, the company has been witnessing a steady climb in its market share that now stands just around 11% of the total Indian market. This bodes well for its upcoming IPO launch.

Points in Favour : Here are some of the key strengths and opportunities of the company that make this new upcoming IPO worth keeping a track of. 

• One of the youngest aircraft fleets in India with an average age of planes at around 4 years. 
• Sharp rise in passenger volume that now stands at over 16 million.
• Owned by the Wadia Group that have diverse business interests and are able to pump capital in the airline.
• Sustained Year-on-Year growth in volume, revenues, and total assets.
• Fresh aircrafts have been ordered to cater to additional routes that the airline plans to operate.

 

Points Against : 

• The industry at large, and the airline, are still trying to recover from the pandemic effect that has resulted in poor financial results and a negative profit. 
• Rising fuel costs are an additional component that are adversely impacting the net profit.
• Insurance in the airline industry has seen a surge in premiums per aircraft. This has further increased the operational costs of the airline.

2. OYO Rooms

OYO (On Your Own) Rooms is one of India’s largest hotel networks that is reported to cover almost 200 cities nationwide. This 1 decade old company was a startup that emerged into a unicorn (valuation of $1 Bn) in a short span of time due to multiple rounds of funding by venture capitalists and other investors. While highly recognisable in India, the company has also extended its operations to south-east Asia, Europe, and the U.S.

The initial draft red herring prospectus (DRHP) filed by OYO with SEBI had ambitions of raising a whopping ₹ 8430 Cr by becoming publicly listed. However, in recent news it emerged that the valuation of the company has taken a hit. In the light of this, OYO has filed an addendum to its original DRHP and reduced the new upcoming IPO’s offer for sale.

Points in Favour: 

• Strong brand name and market presence, pan-India.
• Started operations in other markets and tourism hotspots in South-East Asia, Europe, and the U.S.
• New business approach to trim non-performing assets and generate higher returns.
• Partnership with Microsoft to further automate operations that are expected to result in higher net profits.
• Making strong recovery in the post-pandemic era and narrowing losses reported.

 

Points Against: 

• Recent reduction in valuation may have a negative impact on brand and morale.
• Still a long way for the tourism and budget-travel industry to go in order to fully recover from the impact of the global pandemic.
• Steadily rising inflation, Covid-19 related restrictions, and the conflict in Ukraine have all resulted in a big impact to the tourism industry, delaying its recovery.
• The company has reported losses regularly in the last 3 years, however, the numbers have reduced dramatically indicating a sign of healthy financials in the near future.

3. OLA

Over the last dozen years or so, OLA has emerged as one of the largest mobility platforms in India. The Bengaluru based company offers transportation services through prepaid cabs, metered taxis, auto-rickshaws and two-wheelers. The company has undergone several rounds of funding to reach a valuation of over $5 Bn. Its subsidiary, Ola Electric, has become a renowned EV manufacturer and is a popular name among electric two-wheelers. Its manufacturing facility, the Futurefactory, is a feather in its cap and is one of the largest two-wheeler factories in the world.

The company is looking to launch an IPO, the size of which is likely to be to the tune of ₹ 7300 Cr.  

 Points in Favour: 

• Highly recognisable brand name across the country.
• Strong company financials with its management claiming that it is “one of the most profitable ride-hailing companies in the world”.
• Successful platform with over 1 Bn rides being served each year.
• Branched out with Ola Electric and quickly became a significant player in the EV market.
• Another subsidiary Ola Financial Services offers credit led payments and micro-insurance making the business diverse.

 

Points Against: 

• The business model of a cab-aggregator makes it difficult to exercise control over individual cab drivers.
• Reported incidents in the news regarding any improper behaviour by cab drivers results in a dent to the company’s brand.
• Ola Electric suffered a few notable setbacks regarding their two-wheelers catching fire, resulting in the company doing significant brand damage control. 

 

Note: The updated information regarding these 3 upcoming IPOs such as launch date, final offer and lot size, and share price are yet to be confirmed.