With plenty of liquidity and a flourishing economy, more companies are rushing to seek capital, and India’s IPO market is still booming. With the filing of more than a dozen corporations’ preliminary IPO papers with the Securities and Exchange Board of India (SEBI) on September 30, 2024, another record-breaking time for primary market fundraising was heralded. All together, these businesses are anticipated to raise a minimum of Rs 8,000 crore by providing a combination of new issues and exits for current shareholders. The increase in initial public offerings (IPOs) highlights the rising need for money as businesses look to grow, pay off debt, and increase working capital.
Credits: India IPO
A Record-Breaking Day of IPO Filings
The list of companies filing for their maiden public offerings on September 30 included some of the most anticipated market debutants. Leading the pack are Vikram Solar Ltd., a solar photovoltaic module manufacturer aiming to raise up to Rs 1,500 crore, and Aditya Infotech Ltd., a major player in the CCTV and video surveillance sector, looking to mop up Rs 1,300 crore. These two companies alone are poised to raise nearly Rs 3,000 crore, making them key players to watch in the coming months.
Other firms that submitted their draft red herring prospectus (DRHP) to SEBI include Vikran Engineering Ltd., Sambhv Steel Tubes Ltd., Varindera Constructions Ltd., Ajax Engineering Ltd., Rahee Infratech Ltd., Midwest Ltd., Viney Corp., Jaro Institute of Technology Management and Research, All Time Plastics Ltd., Scoda Tubes Ltd., and Dev Accelerator Ltd.
Credits: NDTV Profit
Each of these companies is tapping the market for a range of strategic reasons. For some, the funds will support expansion plans or the development of new product lines, while others aim to use the capital to retire debt and strengthen balance sheets. For existing shareholders, the IPOs offer a chance to exit and lock in returns.
What’s Driving the IPO Boom?
India’s IPO market is witnessing a resurgence not seen since the market frenzy of 2021. According to data, 62 companies have collectively raised Rs 84,512.6 crore this year, the highest total since 2021. The current pace of fundraising is fueled by a combination of factors, including favorable market sentiment, robust liquidity conditions, and an influx of retail investors.
One key driver is the macroeconomic environment. With India’s economic growth outpacing most global peers, companies are eager to capitalize on the optimism. At the same time, businesses see the IPO route as an ideal way to gain access to long-term capital, particularly in sectors like infrastructure, green energy, and technology.
Top IPOs on the Horizon
The list of IPO hopefuls doesn’t stop with the 13 companies that just filed. Some of the biggest names in Indian business are preparing to go public in the near future, further adding to the frenzy. Hyundai Motor India Ltd., NTPC Green India Ltd., Swiggy Ltd., and Ather Energy Pvt. Ltd. are among the heavyweights expected to hit the market soon.
Together, these four companies alone could raise over Rs 36,850 crore, with Softbank-backed Swiggy and electric vehicle manufacturer Ather Energy expected to generate significant investor interest. Swiggy, in particular, has been making headlines for its growth in the food delivery and quick commerce space, while Ather Energy is riding the wave of India’s EV revolution.
Concerns Amid the Frenzy: Will Liquidity Hold Up?
Although the IPO boom is still going strong, several analysts are raising doubts about how long this market upswing will last. Concerns have been raised over whether the large volume of IPOs would be able to sustain such rapid fundraising without taking focus away from the secondary market. Vikas Kumar Jain, an equities strategist at CLSA Research, believes that if liquidity becomes scarcer—especially if conditions in the global economy worsen—the market may see a slowdown.
A major source of funding for the Indian markets has been foreign institutional investors (FIIs), but if there are any indications that the US economy is softening, FIIs may decide to shift their investments to safer options. This can have an effect on fundraising efforts and slow the market’s growth in India. According to Jain, the IPO craze in India may be subdued if there is uncertainty around inflows into riskier assets like emerging market shares due to a possible cycle of rate cuts in the US.
