India Inc set to raise over `1L cr via IPOS

AFTER RAISING Rs 62,000 crore from the initial public offering (IPO) market in fiscal 2023-24, India Inc is set to mobilise over Rs 1 lakh crore through IPOS in 2024-25 with the economy growing at over 7 per cent and the industry’s requirement of around Rs 2.5 lakh crore equity capitalisation every year.

According to investment bankers, the momentum is visible with a host of companies preparing to enter the IPO space. A total of 56 companies have filed their documents with SEBI targeting to raise Rs 70,000 crore. Currently, 19 companies have secured the SEBI approval to raise an impressive Rs 25,000 crore, while additional 37 companies, eyeing a substantial Rs 45,000 crore, and eagerly await regulatory clearance. Notably, among these 56 prospective IPO candidates, 9 are the new-age tech firms, collectively seeking to raise around Rs 21,000 crore, says a report from Pantomath

Capital Advisors.

In the fiscal year 2023-24 (FY24), as many 76 companies tapped into the public markets through mainboard IPOS, raising nearly Rs 62,000 crore, a 19 per cent increase compared to the previous fiscal year. “The average first-day gains stood at 28 per cent. Meanwhile, over 70 per cent or 55 stocks, are still trading above their issue price. The gains can be attributed to several factors. The buoyant secondary markets, the enthusiastic participation of retail investors in IPOS, and the strong flows from institutional investors played a significant role in these gains,” it said.

Bankers say the IPO market is buzzing with anticipation as a multitude of innovative and captivating offerings are poised to hit the market, buoyed by India’s robust economic growth. With FY2025 on the horizon, expectations are high for yet another stellar year for IPOS. This optimism is fuelled by a confluence of factors, including the surge in domestic capital, enhanced governance practices, the vibrant spirit of Indian entrepreneurship, and favourable government policies bolstered by FDI support. Moreover, the landscape is enriched by the rising tide of financial literacy and the unwavering commitment of institutional investors.

Mahavir Lunawat, Managing Director, Pantomath Capital Advisors, said, “With a diverse array of offerings and a fervent appetite for growth capital, the IPO landscape in FY2025 promises to be dynamic and vibrant, offering exciting opportunities for investors and companies alike. We anticipate that equityraise through IPOS in FY25 could exceed Rs 1 lakh crore. This figure could potentially increase even further if there are no global shocks affecting the Indian market.”

“The resurgence of private capital, substantial job creation, significant reductions in subsidy leakages, judicial reforms, and unprecedented infrastructure development will lead to a market opportunity of unprecedented scale in recent human memory,” said Deena Mehta, Managing Director, Asit C Mehta Investment Interrmediates.

“These factors are certain to propel the Indian economy into a new era, driven by both domestic consumption and export-led growth. Already, the economy is experiencing remarkable demand expansion across various sectors, fostering cost efficiencies and innovation,” Mehta said.

In FY24, the Nifty 50 ended the session with a 29 per cent gain, and the Nifty Small cap 100 and the Nifty Midcap 100 index gained 70 per cent and 60 per cent, respectively. Mutual funds bought shares worth Rs 1.9 lakh crore while foreign portfolio investors were net buyers worth Rs 2 lakh crore. The S&P BSE IPO Index, a gauge tracking the afterlisting performance of newly listed companies, rose 69 per cent this financial year. The rally in the small and midcap segments has also benefited newly listed stocks because most belong to this basket. The overall public equity fundraising, including from FPOS, OFS, and other avenues, increased by 142 per cent to Rs 1.86 lakh crore in FY24 from Rs 76,911 crore in FY23.

The response of retail investors to IPOS in 2023-24 was also higher compared to the previous financial year. The average number of retail applications rose to 1.3 million from about 0.6 million in the previous financial year. The response was due to strong post-listing performance. The average listing gains rose to 29 per cent in FY24 against 9 per cent in the previous financial year.