In the face of global volatility driven by rising interest rates and geopolitical risks, companies have showcased resilience by raising over Rs 52,000 crore through mainboard IPOs in 2023. The number of IPOs has increased, marking a dynamic trend, while experts maintain a strong bullish outlook for the IPO market in 2024. Excluding LIC’s significant maiden public issue in 2022, the collection from initial public offerings has witnessed an impressive 36% increase this year.
2023 has undeniably become the year of initial public offerings, with 173 small and medium-sized enterprises (SMEs) and 52 mainboard listings. The market has seen remarkable debuts and high subscription rates, reflecting the buoyancy of the Indian stock markets. Despite expectations of significant volatility in the upcoming year, experts believe that the primary market will continue to gain momentum.
Sonam Srivastava, Founder and Fund Manager at Wright Research, described 2023 as a landmark year for the Indian IPO market, with 50 companies collectively raising over Rs 65,000 crore. This IPO frenzy not only mirrors the buoyancy of the Indian stock markets but also signifies a growing appetite among companies to tap into public markets for capital.
Looking ahead, around 24 companies, already cleared by the markets regulator Sebi, are poised to raise over Rs 26,000 crore. Additionally, 32 more companies have filed their draft papers with Sebi, awaiting clearances to mobilize more than Rs 35,000 crore, according to data provided by Prime Database.
A focus on fundamentals seems to be paying off, with only seven out of the 50 companies listed in 2023 opening at a discount, compared to 14 companies in 2022. The average gain on the listing day of stocks that debuted in 2023 stood at 29.5%, a significant improvement from 10.72% in 2022, according to Prime Database.
Shares of Tata Technologies, IdeaForge, and Utkarsh Small Finance Bank more than doubled or nearly doubled on the listing day, signaling positive prospects for the IPO market in 2024.
Several companies, including Oyo, Ola, and Go Digit, are expected to enter the market in 2024 after previously postponing their plans. Gupshup Chief Executive Officer Beerud Sheth, in an interaction with DealStreetAsia last year, mentioned the company’s intention to go public in the next calendar year, awaiting better market conditions.
Srivastava suggests that the variety of companies entering stock exchanges, spanning from tech startups to conventional enterprises, signifies a widespread enthusiasm for equity funding. Yet, the substantial increase in IPOs also advises investors to approach with prudent optimism.