India IPO share sales rise to record in 2024, growing about 3-fold from last year on upbeat investor appetite

The amount as of 9 December exceeded the previous all-time high of ₹1,18,723 crore of shares sold in IPOs in 2021, according to data from Prime Database. It was also about three times the shares worth ₹49,436 crore bought in the IPOs of 57 companies through 2023, the data showed.

The figure pertains only to mainboard IPOs and does not include offers by small and medium enterprises.

The IPO rush was driven by retail and institutional investors optimism about the Indian stock markets, which has delivered strong returns, with the benchmark Sensex having advanced over 16% in the past one year. The growing appetite for equity-related instruments has encouraged more companies, including new-age startups, to tap the primary markets and capitalise on the favorable investment climate.

“There has been a growing acceptance of equities as a primary vehicle for long-term wealth creation among individuals. Post-covid-19, the number of new investors entering the market has surged significantly," said Narendra Solanki, head of fundamental research at Anand Rathi. “This shift in mindset is fueled by the realisation that equities have the potential to generate higher returns compared to other investment options over the long term."

 

Younger, tech-savvy investors have been drawn to new-age companies such as Go Digit, Ola Electric, Blackbuck, Awfis, Ixigo and Unicommerce, which went public this year. The absence of any immediate risks in the IPO market and a healthy retail and domestic institutional inflow have provided stability and a strong cushion for companies to go public.

Some early investors in companies are making huge returns by selling a part of their stake under the offer-for-sale component in IPOs. BlackBuck’s early investors Quickroutes International, Tiger Global, Accel and Sands Capital clocked about 2-5x gains in the ₹1,114.7 crore IPO. Sai Life Sciences’ investors such as TPG Asia and HBM Private Equity India are expected to make gains in the range of 4x-13x in the ₹3,000 crore IPO when it closes on 13 December.

Hectic December

Interest in share purchases in the primary market was also driven by the average size of IPOs more than doubling over the past year. According to S Ramesh, managing director and CEO of Kotak Investment Banking, the average size has roughly moved to ₹2,000 crore from about ₹900 crore with the advent of large IPOs of companies such as Bajaj Housing Finance, Hyundai Motor India, FirstCry, and Swiggy.

Hyundai Motor India’s ₹27,870 crore IPO in October was India's biggest so far, exceeding state-run Life Insurance Corp. of India’s ₹21,000 crore offer in 2022.

 

Even as the year winds down, optimism persists in the market. More IPOs are lined up this month, including big-ticket offers from Vishal Mega Mart, Sai Life Sciences, One MobiKwik Systems, Rekha Jhunjhunwala-backed Inventurus Knowledge Solutions, and International Gemmological Institute, which are set to raise a combined amount of ₹18,114 crore of shares.

In comparison, 11 companies includingDoms Industries, India Shelter Financing Corp andInox India cumulatively raised about ₹8,339 crore last December, the data showed.

“We are witnessing a pretty hectic December and while that may seem like an anomaly from the context of global markets, Indian markets for the past two years have had a pretty active issuance calendar in December," said Munish Aggarwal, managing director and head of equity capital markets at Equirus.

While monthly IPO trends depend largely on the varying timelines of companies planning to go public, the calendar for December is in line with offers over the past few months. In some instances, the trend can be skewed by large IPOs such as the ₹8,000 crore offer by Vishal Mega Mart, Aggarwal said, adding that he expects this month to cross about ₹22,000 crore.

Experts noted that the surge in IPOs also reflects pent-up demand from pandemic times, when financials for FY21 and FY22 were partially impacted by covid and companies decided to report more stable numbers before going public.

“A lot of companies and PE guys who had been observing the continuedmomentum in secondary markets as well as generally healthy reception for IPOs chose to start discussing IPOs during late FY23/FY24 and we are witnessing some of those decisions play out in the markets today," Aggarwal said.

He expects the primary market to remain strong through 2025 as well, given that over 75 companies have filed IPO documents that are at various stages of approval.