India’s Leading BFSI and FinTech Companies 2022

22 Strong investor interest has driven Shiller price earnings (P/E) ratio in FY22. Rise in Price to Book Value (P/B) ratio over the long-term average point towards some overvaluation of stock prices. Both the valuation metrices being higher than the long-term average is indicative of some disconnect between the real economy and equity markets. On the debt side, the funds raised through corporate bonds declined by almost 25% y-o-y to ` 3.7 trillion in April-November 2021. The decline in resource mobilisation in the corporate bond market can be ascribed to 26% y-o-y decline in funds raised through the private placement. Amount ( ` trillion) No of Issues April-November 2020 4.9 1309 April-November 2021 3.7 871 Source: Economic Survey 2021-22 Key Trends • Increased participation of retail investors: The key feature of equity markets in FY22, has been increased participation of retail investors, whose shareholding in companies listed on the NSE in value terms increased to 7.1% in September 2021 from 6.4% in December 2019. The substantial increase in the share of retail investors can partly be attributed to the increase in new investor registrations during FY22. In April-November 2021, nearly 22.1 mn individual Demat accounts were added. Retail participation in IPO and other market segments like future and derivatives has also been on rise. • Diversification to new instruments for resource mobilisation: Corporates have been diversifying into a large number of new instruments such as hybrids & convertibles, Real Estate Investment Trusts and Infrastructure Investment Trusts (InvITs) for resource mobilisation. The funds raised through InvITs stood at ` 155 bn in April-November 2021. Policy Measures The key policy measures introduced by SEBI for securities market are as below: Policy Measures Implications IPO reforms – amendment to the norms for making an offer for sale (OFS) during IPO; mandatory disclosure by companies of their intended acquisition target; increased lock-in period for anchor investors to 90 days New rules for OFS would avoid sell of entire holding by large shareholders which may lead to a crisis of confidence amongst retail investors. Also, the increased lock-in period for anchor investors would help avoid volatility in the stock price after exit of anchor investors after the erstwhile lock-in period of 30 days. FromApril 1, 2022, for book-built issues, two-thirds of the portion available for Non-Institutional Investors (NIIs) will be reserved for those applying for more than ` 1 mn of shares, while the remainder will be for those bidding for shares worth ` 0.2-1 mn. This will allow smaller NIIs a fair share of participation in IPOs Approval for creation of Social Stock Exchange (SSE) SSE will facilitate resource mobilization by social enterprises Outlook In the near term, Indian stock indices are likely to remain under pressure given the ongoing geo-political crisis, domestic & global inflationary spirals, likely impact on corporate earnings due to higher input costs and potential policy rate hikes. However, strong economic fundamentals of the Indian economy will continue to support the market in the medium term. Dun & Bradstreet