September set to be the busiest IPO month in 14 years; SME listings fuel public listing surge: RBI data

The Indian stock market's initial public offering (IPO) surge is poised to make September the busiest month for public listings in 14 years, according to the Reserve Bank of India (RBI) bulletin data released on September 20.

More than 28 companies have entered Dalal Street in September so far, both in the mainboard and the small and medium enterprise (SME) segment, as per the data.

“September is set to be the busiest month for IPOs – mainboard and SME – in 14 years, with over 28 companies entering the market so far,” according to the RBI release.

According to the Reserve Bank of India, this IPO surge is due to the rise of interest and the “massive” oversubscriptions in the SME IPO segment.

India was also marked for having the highest number of public listings globally, at 27 per cent in the first half of 2023-24, fueled by the SME segment. The country also ranked for accounting for 9 per cent of the total proceeds raised from IPOs globally, as per the report.

The RBI data also flagged the surge in IPOs, which concerned promoters utilising the opportunity of a company going public to sell their stake at high prices.

“While the vitality in the primary market has helped companies raise capital, it has also raised concerns about promoters utilising the opportunity to offload their holdings at elevated prices, especially in the SME segment,” said the central bank in its monthly data release.

What changes has RBI done?

RBI has implemented certain regulatory changes, like limiting IPO funding through non-banking financial companies (NBFCs) and shifting to a lottery-based allotment system to contain the surging oversubscription figures in mainboard IPO segments.

“It may be noted that regulatory changes like the ceiling on IPO funding by NBFCs and the shift from a proportionality-based allotment method to a lottery-based allotment method have helped contain massive oversubscription rates seen earlier in mainboard IPOs,” said RBI.

The Indian stock market indices, the Nifty 50, closed 1.48 per cent higher at 25,790.95 points after Friday's session, compared to 25,415.80 points at the previous market close. Along with Nifty, BSE Sensex also closed 1.63 per cent higher at 84,544.31 points on Friday, compared to 83,184.80 points the day before.