2024 Review: Indian IPO market shatters records as 317 issues raise ₹1.8 trillion

2024 Review: The Indian primary market witnessed a landmark year, with equity issuances surging by 2.6 times compared to the previous year, underscoring the booming investor sentiment in Indian markets. 

According to a report by brokerage house Motilal Oswal Financial Services (MOSL), over 317 initial public offers (IPOs) collectively raised an unprecedented ₹1.8 trillion in 2024, surpassing the previous record of ₹1.3 trillion in 2021, and significantly outpacing ₹576 billion raised in 2023.

MOSL attributed this phenomenal growth to the evolving nature of Indian equities and robust fund inflows, which are reshaping the capital market and attracting diverse investors.

The Nifty 50 index also played a role in boosting investor confidence as it crossed the 26,000 mark in September 2024, delivering a year-to-date gain of 12 per cent. While this performance lagged the 20 per cent rise seen in 2023, it still reflected strong market fundamentals.

New Listings

The report noted that the contribution of new listings to overall market capitalisation increased to 2.9 per cent in 2024, compared to 1.4 per cent in the previous year. However, it still lags far behind the highs recorded in CY17 (+3.7 per cent) and CY21 (+3.4 per cent).

Among the 78 mainboard IPOs that hit the stock market this year, 69 per cent (54) are trading at a premium to their offer prices, with 11 trading over 100 per cent above their issue prices. Notable performers include Premier Energies (up 194 per cent), Bharti Hexacom (up 155 per cent) and Waaree Energies (up 106 per cent).

Notably, only three companies in the top 20 in terms of issue size – ACME Solar (down 12 per cent), Hyundai Motor (down 7 per cent), and Sagility India (down 2 per cent) – have debuted with a decline from their offer prices.

SME IPOs outshone mainboard IPOs, with 28 of 231 SME IPOs listing at premiums exceeding 100 per cent, compared to just four among mainboard IPOs, noted the brokerage.

Sectoral Highlights

Sectoral diversity emerged as a defining feature of the IPO market in 2024. MOSL observed that while earlier years were dominated by a few sectors, 2024 witnessed a more balanced distribution of IPOs across industries.

"Interestingly, the IPOs were not concentrated but were instead spread across a broad spectrum of sectors, with companies from 23 different sectors raising funds through IPOs this year. Over the years, the sectoral representation of new offerings has experienced a significant transformation in alignment with changes in the underlying economy," stated MOSL.

Automobiles, Telecom, Retail, Capital Goods, and E-Commerce collectively accounted for 59 per cent of the total issue size from 83 companies. "Conversely, 90 per cent of the issuances were concentrated in just three sectors in CY20 – BFSI, Healthcare, and Real Estate. CY21 was mostly driven by E-Commerce, while CY16 and CY17 were dominated by Insurance," said the report.

Capital Goods, NBFCs, Healthcare, Retail, E-Commerce, and Metals attracted significant subscriptions against their offer sizes, signalling robust investor demand. Consumer Durables (+77 per cent), Logistics (+57 per cent), and Capital Goods (+51 per cent) led sectoral gains, while Oil & Gas (-29 per cent) and NBFCs (-17 per cent) were among the laggards.

Market Capitalization

The report categorized IPOs into large-cap, mid-cap, and small-cap segments based on market capitalization. Large-cap companies raised ₹601 billion, mid-caps ₹490 billion, and small-caps ₹666 billion.

During CY24, 81 of 317 IPOs were on the main board, while 236 IPOs happened through SMEs. The capital raised through SME IPOs amounted to ₹92 billion vs ₹49 billion collected in the previous year. Notably, the contribution of SMEs to total IPOs was low at 5.3 per cent in CY24, compared to 8.6 per cent in CY23, informed the report.

Record-Breaking Fundraising

Among main-board issues, the year marked the largest IPO in India, with Hyundai Motor issuing shares worth ₹278.6 billion in October 2024. This surpassed the previous record set by LIC, which raised ₹205.6 billion in May 2022, followed by One 97 Communications with ₹183 billion in November 2021, and Coal India, which raised ₹152 billion way back in October 2010. Further, the year also saw the largest FPO ever, with Vodafone Idea raising ₹180 billion in April 2024.

In total, 43 per cent of the funds raised through new offerings were attributed to just five companies – Hyundai Motor Vodafone Idea, Swiggy, NTPC Green, and Vishal Mega Mart, highlighted the brokerage.

Oversubscription

Oversubscription rates remained high, with IPOs attracting aggregate subscriptions of 26.6 times the offer size, amounting to ₹46.7 trillion versus the offer size of ₹1.8 trillion. Notably, this ratio is the second highest in the decade, trailing only the high attained in CY23 (at 29.9 per cent), informed MOSL.

“Main-board IPOs experienced an oversubscription of 18.9x vs. SME oversubscription of 165.3x. In addition, large-cap, mid-cap, and small-caps witnessed an oversubscription of 11.4x, 14.9x, and 48.8x, respectively. 151 IPOs received an overwhelming response, with more than 100x oversubscription, of which 141 were from the SME space. Of the top 20 companies by size, five experienced a response of more than 50x oversubscription, while two witnessed a response of less than 2x,” it further added.

Outlook

Looking ahead, MOSL remains optimistic about the IPO market’s growth trajectory. It noted that India’s resilient macroeconomic environment, coupled with sectoral diversity and the growing participation of smaller companies, would continue to attract investment.

“The blazing growth of Indian markets, alongside a wave of new issuances across sectors, has dispelled concerns about market depth and diversity. This evolution has created a spectrum of investment opportunities, paving the way for a dynamic capital market,” MOSL concluded.

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