IPO fundraising slumps by 26% in H1 FY24 to ₹26,300 crore, shows data
IPO mobilisation climbed significantly by 76% in the first half of 2023–24, excluding LIC IPO that was launched last year.Retail investors showed greater enthusiasm, with the average number of applications increasing to 10.02 lakh, according to Prime Database Group's report.
In the first half of 2023–24, 31 Indian corporates raised ₹26,300 crore through main board IPOs, a drop of 26% from the ₹35,456 crore raised by 14 IPOs during the same time in 2022–23, according to Prime Database Group's report.
However, IPO mobilisation climbed significantly from the previous year by a whopping 76%, excluding LIC IPO that was launched last year, said Prime Database in its report.
In the first half of 2022–2023, total public equity fundraising surged by 69% to ₹73,747 crore from ₹43,694 crore, according to Pranav Haldea, Managing Director, PRIME Database Group.
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Mainboard IPOs
IPO Subscription Status
Mankind Pharma IPO, worth ₹4,326 crore was the biggest during the first half of 2023–2024. JSW Infrastructure ( ₹2,800 crore) and RR Kabel ( ₹1,964 crore) came after this. On the other extreme, Plaza Wires' IPO raised the least amount of funds, only ₹67 crore. The average deal size was ₹848 crore. As many as 21 of the 31 IPOs came up in only the months of August and September.
According to primedatabase.com, the public's response was positive in general. 19 of the 28 IPOs for which data is currently available received a massive response of more than 10 times (of which 9 IPOs received more than 50 times), while 4 IPOs were oversubscribed by more than three times. The remaining 5 IPOs were oversubscribed by one to three times. With 17 IPOs receiving a response of more than 10 times from the relatively new HNI segment ( ₹2- ₹10 lakh), an encouraging reaction was seen.
Retail investors responded far more enthusiastically than they did in the first half of 2022–2023. In compared to 7.57 lakh in 2022–2023, the average number of applications from the retail sector climbed to 10.02 lakh. Ideaforge received the most retail-related applications (22,29 lakhs), followed by Aeroflex (21,62 lakhs), and SBFC Finance (20,19 lakhs).
The total number of shares applied for by retail by value ( ₹55,516 crore) was 118% more than the entire IPO mobilisation (in contrast to being 33% lower in 2022-23), indicating a substantially greater level of enthusiasm from retail throughout the period. However, the entire allocation to retail was ₹6,506 crore, or 26% of the total IPO mobilisation (slightly down from 28% in 2022-23), according to Prime Database Group's report.
Listing gains in IPO
According to Haldea, the IPO response was further boosted by the successful listing. In comparison to the first half of 2022–23, the average listing gain (based on the closing price on the listing date) jumped to 29.44% from 11.56%. 20 of the 28 IPOs that have been listed so far have generated returns of more than 10%. Utkarsh Small Finance Bank came in second (92%), followed by Ideaforge (93%), and Netweb Technologies (82%). As of the closing price on October 3, 2023, 27 out of the 28 IPOs are trading above the issue price.
Anchor Investors in IPO
A total of 36% of the public issue's total amount was subscribed for by anchor investors. With their subscription totalling to 15% of the issue amount compared to FPIs' 14%, domestic mutual funds played a marginally more significant role than FPIs as anchor investors.
A total of 61% of the entire public offering amount was subscribed for by Qualified Institutional Buyers (including Anchors Investors). Overall, more FPIs (including anchors and QIB) subscribed to 26% of the issue amount than mutual funds (20%).
SME IPOs
The first half of 2023–24 saw a sharp increase in activity in this market, with 97 SME IPOs raising a total of ₹2,731 crore, a 140% increase over the ₹1,137 crore from 63 IPOs during the same period in the previous year. Spectrum Talent Management ( ₹99.99 crore) was the largest SME IPO.
Outlook for second half of 2023-24
“The pipeline continues to remain strong. 28 companies proposing to raise ₹38,000 crore are presently holding SEBI approval while another 41 companies looking to raise about ₹44,000 crore are awaiting SEBI approval (Out of these 69 companies, 3 are NATCs which are looking to raise roughly ₹12,000 crore). According to Haldea, notwithstanding the present volatility in the secondary market, the next 4-5 months are likely to see several IPOs being launched before a pause on account of the general elections,” said Prime Database Group in its report.
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