If 2024 was a record year for initial public offerings (IPOs) with a total mop-up of Rs 1.6 lakh crore, this year promises to be bigger. The enthusiasm of IPO aspirants shows no signs of waning even though the Sensex and Nifty-50 have shed 3% while the broader market have fallen over 12% since the beginning of the calendar year. In contrast, 2024 saw the benchmark Sensex managing 8.2% returns while the mid-cap and small-cap indices returned in excess of 25%.
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Should the nearly 70 companies awaiting the regulator’s nod get the go-ahead, the total amount that’s expected to be raised this year is about Rs 1.82 lakh crore, according to data sourced from primedatabase.com.
The Securities and Exchange Board of India (SEBI) has already cleared 44 IPOs, which are set to garner Rs 66,095 crore. Among the prominent companies lining up to hit the markets are LG Electronics India (tentative issue of Rs 13,000 crore) and HDFC Financial Services (Rs 12,500 crore). Schloss Bangalore, Credila Financial Services and Dorf-Ketal Chemicals India are each looking to raise Rs 5,000 crore.
The supply of paper expected might be large but merchant bankers are in no doubt, whatsoever, that the appetite for fresh issuances is equally big. For smaller investors, the listing gains are a huge attraction. “The average gains from IPOs that went to market in the April 2024 to mid-February period have been nearly 30%,” says a merchant banker.
From family offices, alternate investment funds (AIFs) and high net-worth individuals (HNIs) to retail investors, bankers expect the issuances to attract subscription levels similar to those seen last year. That’s despite the weak sentiment in the secondary markets, which have been beaten down with foreign portfolio investors taking risk off the table and domestic investors booking profits.
However, Siddarth Bhamre, Head of institutional research at Asit C Mehta believes that the appetite for IPOs is a function of a bull market. Citing the examples of two recently-listed companies, Bhamre said, “when market corrects, despite great fundamentals, the subscription is not so good”.
Pranav Haldea, MD of Prime Database Group feels that while a large number of companies are filing papers for IPOs and some have got the go-ahead from Sebi,
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