"IPOs of the PSU entities can bring in a revival in the capital markets (with) the stock market showing signs of recovery," SMC Capitals Equity Head Jagannadham Thunuguntla said.

1. State-Owned Firms Could Reopen Indian IPO Markets
MUMBAI -- With India's stock markets soaring in the wake of a clear-cut election win, capital raising in
its once-red hot primary market is priming for a comeback, but issuance will be selective, and mainly
focused on state-owned firms in the coming months.
Hydro power firm NHPC Ltd, Oil explorer Oil India Ltd. and Engineering company Rites Ltd. will likely
be the first off the block after a 15-month lull, raising up to 37.60 billion rupees ($789 million) from
initial public offerings in coming months, bankers said.
quot;Market sentiment has improved, the mood is optimistic and if things remain smooth, then NHPC, Oil
India and Rites can hit the IPO markets in the next three months,quot; said A.P. Verma, Managing Director
and Chief Executive, SBI Capital Markets Ltd.
Being government-owned, they can afford to come at a cheaper price, while they're likely to be under
pressure by the government to go public due to the need to plug the budget deficit.
Since the Congress Party-led United Progressive Alliance put the reform-oriented Manmohan Singh back
at the helm as Prime Minister earlier this month, Indian stock markets have soared, culminating in a 45%
rally so far this year.
The excitement, however, isn't likely to spill over to primary markets unless IPO pricing accurately
reflects market conditions, such as slowing economic growth nationally.
quot;The irrational exuberance surrounding primary markets earlier doesn't exist anymore. Though founders
(of privately owned firms) will still want to get premium valuations, (IPO) managers are likely to temper
expectations and price issues so that investors are enthused,quot; said National Stock Exchange member and
independent analyst S.P. Tulsian.
The Sensex lost as much as 63% from its peak of 21,206.77 seen in January 2008 before recovering. It
currently trades about 36% below its all time high.
Yet, it's not a cheap market, and bankers say any IPOs will have to be priced below current prices to be
warmly received.
quot;The window is emerging for IPOs and the appetite seems to be returning. Anything that is decently
priced, reflects realistic market valuations, and has a compulsive investment argument should get picked
up,quot; said an investment banker who heads the IPO division of a domestic investment bank.
The Sensex is trading around 14.6 times its 12-month forward estimated price-to-earnings ratio, above the
historical average over the past 12 years of 12.4 times, according to a report by Nomura Equity Research.
On a trailing basis, the market is trading at a 55% premium to emerging markets compared with its long-
term average of 8%, a research note by Morgan Stanley says.

2. Primary markets have been shut in India since Reliance Power Ltd.'s $2.96 billion raising in January
2008. In 2009, only one IPO worth $5 million has taken place.
Among the top 20 IPOs in the past two years in terms of funds raised, 16 of the listed stocks are now
trading below the offer price, according to Dealogic. Of the four that are trading at a premium, three are
state-owned firms - further proof of the valuation gap between private firms and state-owned ones.
The resilience of state-owned IPOs in the wake of the downturn means they could be the first to list,
bankers said.
Apart from NHPC, Oil India and Rites, Cochin Shipyard Ltd., Telecommunications Consultants India
Ltd., Manganese Core India Ltd., Rashtriya Ispat Nigam Ltd. and Satluj Jal Vidyut Nigam Ltd. also figure
on the government's divestment list.
In contrast, the private firms that are eyeing listings could take longer, because they will likely hold out
for a higher price, waiting until investors' risk appetite is back, bankers said.
Standard Chartered Plc, which last month hired bankers for an Indian listing and Adani Power, which re-
filed its preliminary prospectus to raise over $500 million, are two of the bigger private sector firms
looking to go public in India.
Besides pricing, some of the state-owned firms already have regulatory approval in hand.
Both NHPC and Oil India have standing approvals from the capital market regulator, and will just have to
update their accounts and documents before beginning roadshows.
NHPC and Oil India account for almost half of the 74.05 billion rupees that could be raised by the 18
companies that have the regulatory go-ahead to list, SMC Capitals said in a recent report.
Given India's widening fiscal deficit, the government is likely to fast-track divestments in state held firms
to bridge the gap.
The federal government estimates fiscal deficit at 6% of GDP for the financial year ended March 31. But
analysts say that if state deficits and off-budget items like fertilizer and oil subsidies are taken into
account, the total deficit stretches to over 10%.