Equity issuers need dose of realism - Kotak

By Anshuman Daga

DAVOS, Switzerland (Reuters) - India's booming initial public offering market is set to grow further in 2008, but issuers need to be more realistic about valuations to ensure the party goes on, a leading investment banker said.

"As long as issuers demonstrate more restraint in terms of valuations and pricing expectations, I think deals can get done," Uday Kotak, vice chairman of Kotak Mahindra Bank, told Reuters in an interview.

Kotak Mahindra is one of India's leading financial conglomerates and is involved in commercial banking, investment banking, stock broking, mutual funds and life insurance.

"The challenge is that there is a lot of exuberance in the minds of issuers and that is where correction is required," Kotak said on the sidelines of the annual meeting of the World Economic Forum in the Swiss resort of Davos.

Companies in India are expected to raise up to $15.8 billion from new listings in 2008, almost twice as much as last year's record $8.3 billion, according to data from Thomson Financial.

The stock market has been on a five-year, record-breaking bull run partly driven by foreign funds attracted by strong domestic economic growth.

Volatility has however picked up, with the index posting intra-day falls of more than 10 percent on two days last week before rebounding to end a turbulent week down 3 percent.