The Indian stock exchanges BSE and NSE saw a spurt in initial public offering (IPO) in the financial year 2022-23 as private companies rushed to cash in on improved market sentiment as well as strong listing performance. 76 Indian companies raised ₹61,915 crore through main board IPOs in the financial year 2023-24 (till March 22, 2024), 19% higher than the ₹52,116 crore mobilised by 37 IPOs in 2022-23, according to primedatabase, one of India's leading provider of data on the capital market. However, excluding the mega LIC IPO of ₹21,008 crore, which came out in 2022-23, IPO mobilisation increased by 58% from the last fiscal.
Overall public equity fundraising increased by a huge 142% to ₹1,86,108 crore in FY24 from ₹76,911 crore in FY23, according to Pranav Haldea, Managing Director, PRIME Database Group.
In the main board IPO space, the public issue of ₹4,326 crore by Mankind Pharma was the largest in FY24, followed by Tata Technologies (₹3,043 crore) and JSW Infrastructure (₹2,800 crore). At the other end, the smallest IPO was from Plaza Wires raising just ₹71 crore followed by Vibhor Steel (₹72 crore). The average deal size reduced significantly to ₹815 crore in comparison to ₹1,409 crore in 2022-23 and ₹2,105 crore in 2021-22.
The SME IPO segment also saw a surge in activity, with 200 Small and Medium Enterprises (SMEs) raising a total of ₹5,838 crore, up 161% compared to ₹2,235 crore from 125 IPOs in 2022-23. The largest SME IPO was of KP Green Engineering (₹180 crore).
According to Haldea, “While we saw companies from multiple sectors tapping the IPO market in 2023-24, one key sector which had a limited presence was BFSI with just ₹9,655 crore (or 18%) being raised by companies from this sector (in comparison to 51% in 2022-23). New age technology companies (NATC) too were few at just 3 (Yatra, Mamaearth and Zaggle).”
The primedatabase report says the overall response from the public was excellent. Of the 75 IPOs, 54 IPOs received a mega response of more than 10 times (of which 22 IPOs more than 50 times) while 11 IPOs were oversubscribed by more than 3 times. The balance 10 IPOs were oversubscribed between 1 to 3 times.
In comparison to 2022-23, the response of retail investors also increased “tremendously”, with the average number of applications rising to 13.17 lakh, in comparison to 5.57 lakh in 2022-23. The highest number of applications from retail were received by Tata Technologies (52.11 lakhs) followed by DOMS Industries (41.30 lakhs) and INOX India (37.34 lakhs).
In terms of value, the amount of shares applied for by retail was ₹1,95,399 crore, up 216% than the total IPO mobilisation (in comparison to being 19% lower in 2022-23) again showing a much higher level of enthusiasm from retail during the period. The total allocation to retail, however, was ₹16,528 crore which was 27% of the total IPO mobilisation (slightly down from 28% in 2022-23), the report notes.
As per the report, the IPO response was further buoyed by strong listing performance. Average listing gain (based on closing price on listing date) increased to 29%, in comparison to 9% in 2022-23. Of the 75 IPOs, 48 gave a return of over 10%. Vibhor Steel gave a stupendous return of 193% followed by BLS E-Services (175%) and Tata Technologies (163%). 51 of the 75 IPOs are trading above the issue price (closing price of March 21, 2024) with an average return of 65%.
In FY24, 96 companies filed their offer documents with SEBI for approval (in comparison to 75 in 2022-23). On the other hand, 2023-24 also saw 37 companies looking to raise nearly ₹59,000 crore letting their approval lapse, 2 companies looking to raise ₹1,000 crore withdrawing offer documents and SEBI returning the offer documents of a further 5 companies looking to raise ₹2,500 crore.
The euphoria in the IPO market is far from over as the pipeline continues to remain strong. Around 19 companies are lined up to raise nearly ₹25,000 crore after getting SEBI approval while another 37 companies looking to raise about ₹45,000 crore are awaiting SEBI approval (out of these 56 companies, 9 are NATCs, which are looking to raise roughly ₹21,000 crore). According to Haldea, despite the upcoming general elections, the next couple of months should still see a few IPOs being launched.
