It will be largely about LIC

If there is likely to be one issue that will dominate 2022, it will be the LIC IPO. It is not clear whether the LIC IPO will go through in FY22 or FY23. Either ways, it is likely to happen in calendar 2022. With a size of over Rs.70,000 crore, it will not only dwarf other IPOs but also set the tone for the market. How DIPAM plans the marketing of the LIC IPO and whom it taps remains the key. LIC alone could be 40-50% of the 2022 IPO story. 

Many digital IPOs too

However, there is a fairly robust IPO story next year, apart from LIC too. There are a slew of big-ticket IPOs in the queue. These include formidable digital names like Delhivery, Snapdeal, PharmEasy, Droom, Swiggy and many more. It is expected that, based on the market conditions, even Byju’s and the venerable Flipkart may look to do an IPO in Indian markets in the coming year. Most of these digital plays will look to raise large sums to bankroll their plan as well as to give an honorable exit to their early investors. That is going to be the second big story of 2022. IPO story will predicate on LIC and Digital plays. 

How to approach LIC IPO

The beauty of the LIC IPO is that it is a brand that needs no introduction. It is not just small investors, but even policy holders and institutions will be waiting for the LIC IPO. While the valuation of LIC is likely to be around $150 billion, it is expected that the government would price the IPO attractively with discounts to retail investors to make the IPO more attractive. Government has learnt its lessons from the disastrous 2017 IPOs of GIC RE and New India Assurance that an ultra-aggressive pricing is going to leave investors with a bad taste in the mouth. So, LIC IPO will hold the key. 

How to play digital IPOs?

Here is where retail investors have to be a lot more careful and cautious. Most of the digital IPOs in 2021 had a tendency to price their IPOs aggressively That can be partially attributed to the absence of any proper pricing model. However, the Paytm IPO is 40% below the issue price and CarTrade is 50% below issue price. Then you have the relatively better off stories like Nykaa, Zomato and Policy Bazaar, which listed at a premium but saw huge volatility due to anchor investor selling. The tendency to price digital IPOs aggressively is not likely to change in 2022. It is best to let a few digital IPOs pass and try and pick them up in the secondary market around the anchor selling. After all the price is what you pay and value is what you get!