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19 Nov 2024
The initial public offering (IPO) market was buzzing with action in FY24, as a large number of medium and small companies rushed to raise money in a booming stock market.
In all, 76 companies raised as much as Rs 61,921 crore – 18.8% higher than FY23. Out of these, only 4 firms raised over Rs 2,000 crore. These included, Mankind Pharma (Rs 4,326 crore), Tata Technologies (Rs 3,043 crore), JSW Infra (Rs 2,800 crore) and public sector firm Ireda (Rs 2,150 crore). Almost 25 companies raised less than Rs 500 crore.
Going forward, the pipeline looks strong in FY25 as well. According to data from Primedatabase, 19 companies have received regulatory permission to launch IPOs worth around Rs 25,000 crore. These include around 4 big ones of over Rs 2,000 crore. The biggest one will be Ebixcash, which plans to raise Rs 6,000 crore. It is followed by GoDIgit General Insurance, Indegene and Tata Play who plan to raise between Rs 2,500 crore to Rs 3,500 crore. Also, another 37 companies looking to raise Rs 45,000 crore are awaiting the regulator’s approval.
Retail investors became more active in the IPO market both in mainboard and SME segment during the year, which led to higher subscription, said Dhiraj Relli, MD and CEO of HDFC Securities.
Among the most sought-after public issues in FY24 was Tata Technologies – first IPO by a Tata Group company in two decades. The issue broke several records and the stock more than doubled investor wealth on the listing day itself.
Even other IPOs did rather well as 13 stocks that listed last year are currently trading at more than double their issue price. Overall, 54 of the 75 stocks are trading above their issue price.
“The IPO market has done well, (but) so has the overall listed space. I think the true test of the IPO market would probably be in a downcycle or benign equity cycle,” said Aniruddha Naha, executive director at PGIM India Asset Management Company.
While FY24 was in many ways similar to the previous two years which saw strong primary market, there was a sharp increase in the number of smaller IPOs this year. The average issue size this year was around Rs 800 crores as against Rs 1,000-2,100 crores in the previous 7 years.
Nevertheless, FY24 was the third consecutive year the Indian primary market saw issues worth over Rs 50,000 crores. Market participants believe this might continue in FY25 as well considering the pipeline of public issues pending with the market regulator, the Securities and Exchange Board of India.
Relli said the momentum in the primary market will continue as long as the secondary market remains buoyant and there are no series of IPOs listing at a discount to the issue price.
“Going forward, we will continue to see issuances in technology, consumer, industrials, and financial services sectors due to favourable sector tailwinds, growing consumer demand with rising income. Another area of interest would be companies in power and renewables space, as we believe rising urbanisation and increased demand from manufacturing and services sectors will entail additional capacities in this space,” said Neha Agarwal, MD & head of equity capital markets at JM Financial.
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