The Hindu Business Line : 14,000-levels augur well for primary market: Enam

According to him, people are now looking at different business models. "The attraction of primary market is due to larger growth capability," he added.

Excerpts of CNBC-TV18's exclusive interview with him:

Are you surprised by the kind of strength you are seeing in the primary market with practically every issue getting reasonably subscribed and sometimes overwhelmingly so?

I am not surprised. I think here, I can speak on behalf of my community, investment bankers.

When we decided to launch all these offerings; we wouldn't have taken this step if we were not confident about the kind of a support, which is coming through.

The IPOs have been having continuous support from the secondary side. With the market staying firm at around the 14,000 levels, I think that augurs well for the primary markets.

Regarding the response we got to Time Technoplast and the kind of response that's been generated on Vishal Retail, what's your sense at this point in time. Do you think the retail side; HNI side or even the institutional side of the market is now really looking at pumping in money from the primary market route?

Definitely. I think while it's never a guarantee that the primary markets will always make money; some of the January-February issues are pointers to that, lots of people believe that when the markets are at 14,000, they need to seriously look at what to buy in the secondary side.

At least in primary side, there is a greater chance of your making money. Therefore, they are definitely looking at the primary markets.

Is it just listing time gains that investors are chancing upon or are they looking at long-term stories, and maybe a very different business model like that probably a Time Technoplast has to offer?

If we take a specific instance of Time Technoplast, I think people are looking at significantly different business models.

You should also understand that most of the IPOs that come to the market are not talking only about them coming to the market at the cusp of their earnings growth; they would be at the top of earnings growth.

Therefore, they would expect a significant greater momentum of earnings in the next couple of years than compared to the markets as a whole.

This is why I guess that the attraction of primary markets is slightly higher. Not only because these stocks are probably at a discount to peers in the listed market, but also because they probably have a slightly larger growth capability and a growth horizon.

What's your hunch - will follow-on public issues do as well as these IPOs?

Follow-on public issues have one fantastic characteristic; there is a public benchmark in terms of a stock price. Therefore, that's clearly an evident and if there are significant volumes happening at that level, that's also going to give the kind of support at these levels. In terms of the kind of a support you will get for these issues, I think a well marketed story, for example, we are a part of the ICICI Bank's follow-on offering.

We believe that when we go to the markets when the issue actually opens, we would continue to get the same kind of a support which the other offerings have been getting.

Are you seeing retail participation really taking a quantum leap, or is all this over subscription largely because of this insatiable appetite of HNIs and QIBs?

HNIs and QIBs are an important factor. But if you start looking at retail; I think that today, with the introductions of the margin system, most of the QIBs are coming in on the last day. Therefore, retail is not taking a cue from the QIBs alone.

They are taking a cue on their own as to whether they need to come in or not. Therefore, we are seeing a significant flow back of retail demand into the primary market.

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14,000-levels augur well for primary market: Enam