In 2023, funds generated via QIP hit a three-year high of Rs 42,000 crore

In 2023, funds generated via QIP hit a three-year high of Rs 42,000 crore

In 2023, funds generated via QIP hit a three-year high of Rs 42,000 crore

The greatest sum raised since 2020 was around Rs 42,000 crore, which was raised by roughly 35 enterprises using QIP in 2023.

In contrast to the 35 businesses that funded Rs 41,997 crore in 2021, 14 listed corporations raised Rs 11,743 crore via QIP in 2022.

In November 2023, listed businesses raised around Rs 12,150 crore via the qualified institutional placement (QIP) method, which was the greatest amount raised since August 2020 and almost reached a 40-month high.

The greatest sum raised since 2020 was around Rs 42,000 crore, which was raised by nearly 35 enterprises using QIP in 2023. Over 70% of this amount was contributed by banks and non-banking financing businesses. Manufacturing businesses utilized the leftover cash. Analysts noted that although there are encouraging signs of an uptick in private capital investment, the levels are still quite modest.

Analysts stress that banks that raise capital would have a stronger financial foundation, and they stress how important it is for Indian banks to boost their capital reserves right once. In order to achieve the continuous provisioning needs and increase the risk-weighting for certain loan segments in preparation for potential future credit growth, this step is crucial.

According to several experts, the main reasons banks and NBFCs are collecting money are to fulfill reserve requirements and prepare for future increases in loan growth. According to analysts, the RBI's decision to raise the risk weight on consumer loans has resulted in small and medium-sized banks having to pay larger provisions for consumer loans, which has led to a rise in capital adequacy.

Bajaj Finance Ltd raised around Rs 8,800 crore, making it the highest QIP. Union Bank of India and Bank of India earned around Rs 5,000 crore and Rs 4,500 crore, respectively, after this. Additional noteworthy fund raisers include Aditya Birla Capital (Rs 1750 crore), Federal Bank (Rs 3040 crore), IDFC First Bank (Rs 3000 crore), Bank of Maharashtra (Rs 1000 crore), and Cholamandalam Investment & Finance (Rs 4000 crore).

Suzlon Energy, at around Rs 2000 crore, has the biggest QIP of all the firms. Notable companies were Apar Industries Ltd, Blue Star Ltd, Sheela Foam (Rs 1200 crore), and Ramakrishna Forgings Ltd (Rs 1000 crore apiece). Participating in the QIP were other businesses such PG Electroplast, Data Patterns India, Orchid Pharma, HFCL, Power Mech Projects, Rategen Travel Technologies, Ather Industries Limited, Texmaco Rail & Engineering Limited, RHI Magnesita India, and Happiest Minds Technologies.

Analysts believe that the rush to obtain cash indicates that private capital investment is on the rise again. He pointed out that the need for brown capex is shown by the business average capacity utilization, which is more than 73.6%. India's consistent domestic development is causing it to establish more industrial capacity for international markets.

The need for renewable energy, infrastructure, and consumption sectors has all grown. Furthermore, experts said that a robust stock market, propelled by investor interest, is luring corporates to provide larger returns, minimizing equity dilution and preserving attractive debt-to-equity ratios. said.

According to Sneha Poddar, an analyst at Motilal Oswal, a lot of businesses are raising money via QIP at more advantageous prices, using the robust secondary market.

14 listed firms raised Rs 11,743 crore via QIP in 2022; this is a significant contrast from the Rs 41,997 crore that 35 companies raised the previous year and the Rs 80,816 crore that 35 companies raised in 2020 by using the same route.

Analysts predict that at least for the first part of next year, the trend of raising money via QIP will continue. Geojit Financial analyst Vinod Nair expressed confidence about the stock market, particularly in the first half, citing the pre-election surge and the drop in global bond rates as catalysts for an increase in risk-taking.

Nair said that there may be a pause in QIP agreements in 2024 during the national election season due to possible economic concerns in wealthy nations.