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19 Nov 2024
The primary market is set to witness another exceptional year in FY2024-25 thanks to robust economic growth and increasing hopes for policy continuation. For the third consecutive year, raising funds through initial public offerings (IPOs) would be a buzzing activity on D-Street, as 56 companies get ready to raise ₹70,000 crore, equivalent to $8.4 billion, in FY25. Moreover, 19 companies have already secured the Securities and Exchange Board of India (SEBI) approval to raise a substantial ₹25,000 crore.
Experts believe that the IPO market is likely to witness a promising year. “In FY2024-25, the IPO market is poised for another exceptional year, driven by increased domestic capital, improved governance, thriving Indian entrepreneurship, favourable government policies supporting FDI, rising financial literacy, and diligent institutional investors. Many IPOs are in the pipeline, reflecting the robust support of the Indian economy. With diverse offerings and a strong appetite for capital growth, the IPO landscape in FY2024-25 promises to be dynamic and vibrant, offering exciting opportunities for investors and companies," Mahavir Lunawat, Managing Director, Pantomath Capital Advisors Private Limited, told Livemint in an interview.
Lunawat further highlighted that equity raised through IPOs in FY25 will exceed ₹1 lakh crore. “This current market condition has created an enormous opportunity for inclusive growth and capital availability to a broader spectrum of enterprises and ecosystems. We anticipate that equity raised through IPOs in FY25 will exceed ₹1 lakh crore. This figure could increase even further if no global shocks affect the Indian market," he observed.
On the other hand, investor participation in IPOs in FY25 will depend on factors such as market conditions, company performance, sectoral trends, government policies, and global economic factors.
“With favourable conditions in place, we can anticipate healthy investor engagement. The willingness of many large companies to raise capital after deferring their IPO plans also signals good participation from investors in terms of IPO subscriptions in FY25," Lunawat pointed out.
The Bharatiya Janata Party (BJP) significantly strengthened its political clout in the state assembly elections by clinching emphatic victories in Madhya Pradesh, Rajasthan, and Chhattisgarh. “These results are a positive indicator, creating a sentiment that the ruling government might return to power in the upcoming Lok Sabha election in 2024. This outcome instils confidence in both domestic and global investors, encouraging long-term investments in the Indian equity markets, given the anticipated continuity of policies and reforms," the MD of Pantomath Capital Advisors noted.
Capital markets will be an enabler in achieving the government's large investment targets, according to him. Assessing IPO exuberance's current state involves factors like market conditions, investor sentiment, company performance, regulatory environment, and historical trends.
“While concerns about unsustainable levels of exuberance exist, there are opportunities for further growth, especially in sectors with strong prospects and innovative models. As per our analysis, whether from the perspective of demand or from investible funds perspective or from inclusivity point of view, India would be in dire need of 2.5 lac crores of equity capitalisation each year," Lunawat said.
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