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19 Nov 2024
Retail investors are likely to continue flocking to initial public offerings (IPOs) in India this year, as new stocks show impressive gains, outperforming broader markets and international listings.
Data compiled by Bloomberg reveals that shares debuting in India this year have seen an average increase of about 57%, compared to 32% in the Asia Pacific region and more than double the global average.
At least 15 companies are planning IPOs in the coming months, potentially raising a combined $11 billion. Retail investors have played a crucial role in the success of these offerings in India, which has become a hotspot for IPOs in 2024 due to high valuations and strong economic prospects.
Vineet Arora of NAV Capital Emerging Star Fund noted that younger investors are increasingly turning to stock markets instead of traditional assets like real estate.
Prime Database Group data shows that retail investors bid for about $10.6 billion worth of shares in 36 IPOs on Indian exchanges this year, over 12 times the available portion. Every new share sale fully filled its individual quotas.
Despite increased regulatory surveillance and measures to curb retail participation, such as limiting lending for share purchases, individual demand remains strong. Seven recent IPOs saw retail demand exceed the available shares by more than 50 times, with Exicom Tele-Systems being particularly popular, as its stock surged nearly 230% from its IPO price.
Pranav Haldea, managing director at Prime Database Group, observed that many retail investors are in it for quick profits, not long-term investments, given the substantial listing gains.
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