August IPOs: 19 stocks hit Dalal Street this month, 90% of them trading above issue price

While the secondary market has experienced intermittent slowdowns in the current year, the primary market has shown relentless vigor, consistently driving forward with robust activity—a pattern that has remained steadfast since 2023. This sustained momentum has turned the Indian IPO market into a global investment hotspot.

In the first half of 2024, India led the world in IPO activity, a trend that has been continuing in the second half of the year as well. In July alone, 31 companies listed their shares on the secondary market, and in just the first two weeks of August, 19 companies (including Brainbees Solutions and Unicommerce eSolutions) have raised funds from the primary market, with 18 of them now trading above their issue price, according to Trendlyne data. 

Mainboard segment sees mega raises

In the mainboard segment, five companies have raised a total of ₹13,725 crore, with Ola Electric Mobility leading the pack by raising ₹6,145.6 crore, followed by Brainbees Solutions at ₹4,193.7 crore, and Ceigall India at ₹1,252.7 crore.

In the SME segment, 14 companies raised a total of ₹522.8 crore in the first 2 weeks of the current month. When combined with the mainboard segment, the total funds raised across both segments reached ₹14,247 crore.

Most of these IPOs received stellar investor interest, with 13 out of 19 achieving subscription rates exceeding 100%. Notably, SA Tech Software's IPO was subscribed 558 times, followed by Trom Industries at 430 times.

Among the top performers, Rajputana Industries shares are currently trading 142% above their issue price, while Afcom Holdings stock is trading 109% higher than its IPO price.

The strong momentum in the IPO market has been primarily driven by retail investors, who have been encouraged by a robust secondary market and easier access to offerings through online platforms, often resulting in significant oversubscription.

This surge in IPO activity has also attracted global corporations seeking to go public in India. Hyundai India, for instance, plans to raise $3 billion through its IPO, potentially becoming the largest in India at a valuation of up to $30 billion. Similarly, LG and several other international companies are also preparing for public listings in India.

Meanwhile, investors have been showing a notable interest in small and medium enterprises (SMEs), which have garnered significant attention and enthusiasm. According to data from Trendlyne, 153 companies went public in the first half of FY24, with 117 of them—representing 77%—coming from the SME segment. This marks a 67% increase compared to the same period last year, when 70 SME companies raised funds from the capital market.

The Draft Red Herring Prospectuses (DRHPs) of several companies indicate that the primary goals for raising funds include repaying debt, financing expansion projects, and meeting working capital requirements.

IPO frenzy likely to continue

According to Pantomath, the IPO market is currently characterised by a blend of new entrants and established firms seeking capital through public offerings, highlighting a varied investor appetite. While some IPOs have received only moderate interest, others have been heavily oversubscribed, demonstrating the wide range of investor enthusiasm.

Recent updates on IPO performances show a strong trend in listings, with several stocks debuting at a premium. This positive trend has enhanced investor confidence, resulting in greater engagement with upcoming IPOs.

It projects that strong IPO activity will persist in the latter half of the current year, fueled by an increase in liquidity events. The robust economic growth in India is a major catalyst, supporting business expansion and enhancing investor confidence.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.