India sees record number of IPOs this year
India has become a bustling hub for initial public offerings (IPOs), with a record-breaking number of small and medium-sized businesses going public this year amid a thriving stock market. Bloomberg data reveals that 184 companies have been listed in India this year, surpassing any previous full year. In October alone, 30 firms debuted on the market, outpacing the US, China, and Hong Kong. This boom is credited to robust economic activity and favorable investor sentiment toward India.
Past year's IPO tally
As per the data compiled by Chittorgarh, a total of 151 companies went public in India in 2022, as opposed to 134 in 2021. Total proceeds in 2022 amounted to $7.5 billion (roughly Rs. 62,439 crore) in 2022 compared to $17.3 billion (roughly Rs. 1.44 lakh crore) in 2021, a decline of 56%.
Factors driving the IPO boom
Earlier this year, India's primary stock indices hit all-time highs as earnings and the economy expanded, despite the highest interest rates since 2018. Investor interest has also grown due to China's slowing economic growth. Adarsh Ranka, a partner at SR Batliboi and Associates LLP, stated, "The IPO landscape is witnessing a surge in activity driven by both an urge to tap the capital markets pre-or-post Indian general elections and strong economic activity, positive domestic and foreign investor sentiment toward India."
Challenges and market risks
However, analysts from Jefferies to DBS have cautioned that political risks from the upcoming elections may impact Indian stocks, creating challenges for IPOs. Last month, lackluster earnings from key companies triggered a selloff in India's market, while concerns about the Israel-Hamas conflict and high US rates dampened demand for riskier assets. Foreign funds pulled out $1.5 billion (roughly Rs. 12,488 crore) in the week ending October 27, marking the largest weekly withdrawal since September 2022.
Mixed outlook for new deals
Although India's IPO tally has reached a new high, proceeds have dropped 15% year-on-year to $4.9 billion (roughly Rs. 40,783 crore). Last year, IPOs by Life Insurance Corporation of India and Delhivery, led to investor losses of 36% and 17%, respectively. The prospects for new deals are mixed. Honasa Consumer Ltd's IPO has seen only 78% subscription as of now on the final day, while Cello World's Rs. 1,900 crore IPO was nearly 39 times oversubscribed by the final day.
