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19 Nov 2024
India has emerged as a standout performer in the global initial public offering (IPO) market, with its stock exchanges—BSE and the National Stock Exchange (NSE)—securing the top spot worldwide for 2023, according to EY’s Q4 IPO Trends report.
The report highlights that India’s stock exchanges recorded the highest number of IPOs globally, with a total of 31 IPOs (including one InvIT) in Q4 2023. This marks a significant 72% increase compared to Q4 2022 and a 41% rise from Q3 2023, showcasing robust growth in the primary markets.
The Small and Medium Enterprises (SME) segment also displayed strong performance, with 61 IPOs in Q4 2023. This represents a notable 79% increase from Q4 2022 and a 30% rise from Q3 2023.
Adarsh Ranka, Partner and Financial Accounting Advisory Services Leader at EY, commented on the market's future outlook, anticipating continued growth in the Indian IPO market for Q4FY24, driven by positive investor sentiment, economic strength, and expectations of lower inflation and interest rate cuts in 2024. This favorable environment is expected to lead to further growth in both the number and size of mainboard and SME IPOs.
Q4 2023 was the most active period of the year, accounting for nearly 40% of the total IPO listings. After a slow start in the first half of 2023, IPO activity surged in the second half, with over 18 companies filing their Draft Red Herring Prospectus (DRHPs) in Q4 2023, indicating a promising outlook for 2024.
Key sectors such as power & utilities, healthcare, automotive & transportation, and banking & capital markets were particularly active, according to recent DRHP filings. Additionally, the recent amendment by Sebi to the Real Estate Investment Trusts Regulations, 2014, enabling the creation of Small & Medium Real Estate Investment Trusts (SM REITs), is expected to further drive market growth and innovation.
In Q4 2023, the consumer products & retail, diversified industrial products, automotive & transportation, and technology sectors led the IPO activity, with 21, 14, 9, and 9 IPOs, respectively, across the main and SME segments.
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