Softbank-backed Meesho, Zomato-backed Shiprocket among 7 companies to get Sebi's approval for IPO launch

Introduction

India's capital markets regulator, Sebi, has granted approval for the launch of Initial Public Offerings (IPOs) to seven companies, including prominent e-commerce players Meesho (Softbank-backed) and Shiprocket (Temasek-backed). These approvals signify a green signal for these companies to proceed with their public issues in the Indian market. Collectively, these seven companies aim to raise approximately Rs 7,700 crore through their IPOs. Softbank-backed Meesho received Sebi's observation letter on October 14, while Temasek-backed Shiprocket received its approval on Friday. Both Meesho and Shiprocket utilized a confidential route (pre-filing) to submit their IPO papers to Sebi, a strategic move gaining traction among firms. Five other companies, including German Green Steel and Power and Allied Engineering Works, also secured Sebi's observation letters, which is market parlance for regulatory clearance, allowing companies to launch their IPOs.

Key Takeaways

• Sebi's approval for seven IPOs, including two prominent tech-backed firms like Meesho and Shiprocket, indicates a vibrant and growing Indian primary market.
• The collective target of Rs 7,700 crore across these offerings highlights significant capital raising activity and robust investor interest across diverse sectors in India.
• Indian investors should note that several of these public issues will be a combination of fresh issue and offer for sale, impacting the capital structure and potential dilution.
• The confidential filing route used by Meesho and Shiprocket suggests strategic and private planning for their highly anticipated market debuts, potentially allowing for more flexibility in pre-IPO engagements.

Company Overview

Meesho, a significant player in the Indian e-commerce landscape, is notably backed by Softbank, a global technology investor. The company operates a reselling-focused e-commerce platform that empowers individuals and small businesses. Shiprocket, an e-commerce enablement platform, offers logistics and fulfillment solutions to D2C (direct-to-consumer) brands and small and medium-sized enterprises. It counts prominent investors like Temasek and Zomato among its backers, reflecting its strategic importance in the evolving digital commerce ecosystem. In addition to these tech giants, five other companies have also received Sebi's nod for their IPOs: German Green Steel and Power, Allied Engineering Works, Skyways Air Services, Rajputana Stainless, and Manika Plastech. The public issues for Rajputana Stainless, Skyways Air Services, Manika Plastech, German Green Steel And Power, and Allied Engineering Works will comprise both a fresh issue of shares and an offer for sale by existing shareholders.

Market Analysis

The Indian capital markets regulator, Sebi, is demonstrating an active approach in clearing IPOs, which signals a supportive and conducive environment for new listings in the country. This regulatory efficiency is a positive indicator for companies looking to tap into public markets for capital. The approvals span a diverse array of sectors, ranging from cutting-edge e-commerce and logistics enablement platforms to traditional industries such as steel, power, and engineering. This broad sectoral representation reflects a wide market interest and suggests potential growth across various segments of the Indian economy. The collective aim to garner around Rs 7,700 crore through these public issues further underlines a healthy appetite for capital raising and indicates robust investor participation anticipated in the Indian market, reflecting underlying economic confidence.

Further reading: IPO-bound Pine Labs turns profitable in June quarter of FY26.

Valuation Analysis

Valuation details for the companies involved in these IPOs have not been disclosed at this stage. Specific financial metrics, pricing bands, and post-listing market capitalization figures will become available closer to the launch of their respective public issues when their red herring prospectuses are made public.

Risk Assessment

While Sebi's observation letter provides crucial regulatory clearance, it is important to recognize that several factors can still influence the ultimate success of an IPO. Market volatility, driven by domestic or global economic shifts, and prevailing investor sentiment at the time of launch remain significant considerations. A downturn in general market conditions or a shift in investor appetite towards specific sectors could impact subscription levels and listing performance. Furthermore, the confidential filing route employed by some companies, while strategic for pre-market maneuvering, may limit initial public scrutiny of company financials prior to the formal draft red herring prospectus. This means that a comprehensive understanding of the company's health might only become widely available at a later stage. Finally, execution risk post-approval, encompassing aspects like accurate pricing, effective marketing, and achieving desired subscription levels, will be pivotal in determining the success of each IPO launch.

Investment Perspective

Sebi's green light for these seven IPOs presents new potential investment avenues for Indian retail investors looking to diversify their portfolios and participate in India's growth story. However, investors should approach these opportunities with careful consideration and thorough due diligence. It is crucial to evaluate the business models, financial health, growth prospects, and competitive landscape of each company before contemplating participation. Understanding the company's revenue streams, profitability, and future expansion plans will be vital. The mix of fresh issue and offer for sale components in several IPOs will also impact the capital structure and potential dilution for new investors, requiring an assessment of how this might affect their future returns and the company's balance sheet.

Further reading: Avaada Electro Files Confidential DRHP with SEBI for ₹9,000–10,000 Crore IPO - Saur Energy.

Execution Guardrails

1. Market scanning: Continuously monitors regulatory filings, financial news, and sentiment to highlight actionable IPO events.
2. AI risk and potential returns analysis: Benchmarks fundamentals, valuations, and demand indicators to quantify upside versus risk.
3. pre-trade position sizing recommendations and entry: Applies risk limits and provides recommendations for subscriptions or allocations in line with investor preferences.
4. Real-time monitoring and adjustments: Tracks listing updates, market tone, and liquidity to adjust positioning as signals evolve.
5. Automated exit and performance tracking: helps you track configured exits and records outcomes for ongoing strategy refinement.

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How PortoAI Helps You

• PortoAI provides Indian retail investors with autonomous market scanning to identify new IPO opportunities as they receive regulatory approval.
• It delivers early signals and alerts on significant market events, helping investors stay ahead of key developments.
• PortoAI helps distill complex regulatory announcements into actionable insights, making it easier for retail investors to understand market shifts.

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Sources

• Softbank-backed Meesho, Zomato-backed Shiprocket among 7 companies to get Sebi's approval for IPO launch (economictimes.indiatimes.com; Jan 27, 2023, 08:35 PM IST) — https://economictimes.indiatimes.com/markets/ipos/fpos/meesho-shiprocket-among-7-cos-to-get-sebis-nod-to-launch-ipos/articleshow/125059758.cms

Disclaimer: Educational content, not investment advice.