Follow Us











Startup Sectors

Women in tech







Art & Culture

Travel & Leisure

Curtain Raiser

Wine and Food


Advertise with us

2017 may not be the year to go for IPO because of short-term impact of demonetisation

2017 may not be the year to go for IPO because of short-term impact of demonetisation

Thursday January 12, 2017 , 7 min Read

In the year gone by, the Bombay Stock Exchange saw a variety of industries listing, with companies from across sectors like healthcare, finance, education, food, energy, and manufacturing, beginning their journey with public money. Although there were fewer IPOs in 2016, some important names raised public money from the bourses.


As opposed to 2015, 2016 was a more significant year to evaluate the IPO market. Though the year witnessed a 22-percent drop in the number of IPOs from 2015, the total market capitalisation in 2016 was much higher as compared to 2015.

Sai Venkateshwaran, Partner and Head, Accounting Advisory Services (KPMG India), said,

"In 2016, the Indian capital markets saw a fair amount of activity in the primary markets, with numerous IPOs raising over Rs 25,000 crore. The IPO activity in 2017 is expected to continue with more private equity-backed companies making it to the market. The timing may be impacted due to several factors, including sector-specific issues as well as some macro-economic considerations, such as the impact on growth and financial performance due to demonetisation."

Further, one can expect some activity in sectors such as real estate and infrastructure, with the new structures such as REITs and InvITs expected to make a debut in the Indian market.

Gagandeep Bakshi, Associate Director - Investment Banking, Intellecap pointed out the demonetisation as a probable deterrent in IPO activity in 2017. Says Gagandeep,

“I don’t know if companies will be able to show their profitability and grow the way they had predicted before the demonetisation. If these companies are getting listed in three or four months, the profit will go down because of the demonetisation. 2017 may not be the right year to get listed because there is a short-term impact of demonetisation on the companies.”

Let's take a look at a few IPOs that had a significant impact on the startup ecosystem in 2016.

Teamlease Services Ltd

Mumbai-based TeamLease Services is a human resource services company that caters to both small and large business clients. It provides temporary staffing, permanent recruitment, and regulatory consultancy for labour law compliance, as well as retail, institutional, and enterprise learning solutions.

The market capitalisation for Teamlease is Rs 1,506.91 crores. The profit as of March 31, 2016, was Rs 24.2 crore.


Infibeam is an Ahmedabad-based online marketplace and its business operations are divided among retail, OPM enterprise, digital entertainment, travel & ticketing, logistics, digital marketing, and customised gifting.

Infibeam offers cloud-based e-commerce platform services in B2C and B2B verticals. The company was the first online retailer to go public, with a Rs 450-crore initial share sale. The company was believed to have been fully subscribed on the last day of its IPO.

Infibeam's market capitalisation is Rs 6,128.95 crore and the net profit as of March 31, 2016, was Rs 4.2 crore.

Narayan Hrudayalaya

Bengaluru-based Narayana Hrudayalaya is a private service provider founded in 2000 and operates a chain of multi-specialty, tertiary, and primary healthcare facilities with a network of 23 hospitals, eight heart centres, and 25 primary care facilities across 32 cities, towns and villages in India. Its market capitalisation was Rs 6,918.64 crore and the profit after tax as of March 31, 2016, was Rs 57 crores (approx)

Thyrocare Technologies

Diagnostic chain Thyrocare Technologies Ltd., was founded in 2000. With a presence in over 2,000 cities and towns in both India and abroad, the company is focussed on early detection and management of disorders and diseases. Thyrocare Technologies, as of November 30, 2015, conducted 192 tests and 54 profiles of tests.

It also operates a network of molecular imaging centres that focus on monitoring early and effective cancer. The centres are run through its wholly-owned subsidiary, Nueclear Healthcare Limited (NHL), in New Delhi, Navi Mumbai, and Hyderabad.

Its market capitalisation Rs 3,740.23 crore and the profit as of March 31, 2016, was Rs 58.7 crore.

Quick Heal Technologies Ltd

On February 8, 2016, Quick Heal Technologies hit the capital markets with its IPO at a price band of Rs 311 to Rs 321 per equity share and a fresh issue of Rs 250 crore. Quick Heal became the first Indian software product to hit the capital markets with an IPO. Its equity shares were listed on the BSE and NSE. The IPO comprised an offer for sale of upto 6,269,558 equity shares by the founders of Quick Heal (Kailash Sahebrao Katkar and Sanjay Sahebrao Katkar), Sequoia Capital India Investment Holdings III, and Sequoia Capital India Investments III.

Started as a Quick Heal Antivirus for DOS in 1995, Quick Heal as of February 2016, had 33 branches across India, and customers from approximately 80 countries. In 2010, the anti-virus security company received an investment of Rs 60 crores from Sequoia Capital. Launched in February 2015, Quick Heal Gadget Securance for Android generated a revenue of Rs. 2.5 crore in just five months.


Microfinance company Ujjivan Financial Services Ltd entered the capital markets on April 28, 2016, with around Rs 880 crore IPO. Out of some eight microfinance companies receiving small bank license, Ujjivan was the second one after Equitas Holding to hit the capital market. The IPO was priced at a band of Rs 207-210 a share of Rs 10 each. The pre-IPO placement raised Rs 291 crore at Rs 205 a share.

Ujjivan was started in 2005 by Samit Ghosh who has been a member of the international banking community for over 30 years and had successfully led the launch of retail banking for Standard Chartered in the Middle East and South Asia, and for HDFC Bank in India.

The year that was for IPO 

Gautam Duggad, Head (Research-Institutional Equities), Motilal Oswal Financial Services, said,

“The overall IPO performance was very good in 2016. The companies that got listed earned decent return and the interesting thing about last year’s IPOs was that the companies were from different backgrounds like finance, bank, micro-finance, diagnostics with unique business model. However, it is very difficult to predict the IPO market in 2017 as it is dependent on market conditions, and requirement of capital.”

Govind Khetan, Associate, Investment Banking at ICICI Securities, agreed, adding that IPOs in 2016 saw a mix of businesses with unique business models. He pointed ICICI Prudential's out to be one of the largest IPOs in 2016.

Experts believe that overall the IPO market had made a good comeback in 2016. Gagandeep labelled the IPOs in 2016 as a positive outcome at large. One of the game-changers he noticed in 2016 was micro-finance institutions (MFI), like Equitas Holdings Limited, getting listed.

This is why the Equitas Holdings' IPO matters because MFI businesses are very small and are trying to grow significantly and liquidity through IPO implies how promoters get business value out of these IPOs.

With several stocks reporting good post-listing gains, the overall activity around IPOs was positive. However, there were several private equity-backed companies that have faced delays in their IPOs, despite securing SEBI approval.

Venkateshwaran said the reasons for these delays include mismatch in valuation expectations of promoters and financial investors, financial results not being in line with expected performance and sectoral issues.

He added that key sectors with significant IPO activity were financial services, consumer and industrial, with many driven by private equity investors who were banking on the buoyancy in the market to exit their older investments. These IPOs also reflected a growing demand for companies in newer sectors with limited peers on the secondary market. Many of these companies also did not raise fresh capital and only had a secondary sale to provide exit to investors.