September IPO Surge: 47 companies raise over ₹16,000 crore; 61% trade above issue price

While excitement remains high in India's secondary market, where the benchmark indices are reaching new heights daily, the primary markets are also buzzing and witnessing a flurry of activity.

Once dominated by institutions, India's primary market is now experiencing a surge in retail participation, driven by the potential for higher returns and easier access to the financial markets.

In the month of September, 47 companies debuted in the secondary market, collectively raising ₹16,152 crore, according to the data compiled by Livemint. 

Of these, 13 were from the mainboard category, with Bajaj Housing Finance being the largest, having an initial public offering (IPO) size of ₹6,560 crore. It was followed by Premier Energies, with an issue size of ₹2,830.4 crore. The remaining 34 companies belonged to the SME category.

Nearly 61% of the 47 companies that listed in September are trading above their issue prices. Travels & Rentals' SME IPO leads the pack with a 283% gain, followed by Premier Energies at 146%, and Namo eWaste Management at 127%.

Retail investors' enthusiastic participation in IPOs has pushed subscription levels to staggering heights, particularly in the SME segment. Finding an SME IPO that isn’t fully subscribed in the retail category has become quite uncommon.

Many offerings are now being oversubscribed by significant margins, with the retail portion, in some cases, garnering up to 2,000 times bids. Investors are increasingly drawn to the excitement surrounding listing days, as the majority of stocks—particularly those in the SME category—are witnessing listing gains of over 100%.

In September, the retail portion of WOL 3D, an SME IPO, was oversubscribed by 488 times. Of the 34 SME IPOs that were listed last month, 16 saw their retail portions being subscribed more than 100 times.

The surge in retail participation has encouraged many companies to tap into the financial markets for fundraising. Furthermore, given the favourable market conditions, companies are also motivated to raise funds from the IPO route.

India’s IPO market triples growth in first 8 months

In India, 227 IPOs were listed in the first eight months of 2024, raising a combined USD 12.2 billion—a nearly threefold increase from USD 4.3 billion raised during the same period in 2023, according to a report by GlobalData.

India stood out within the Asia-Pacific (APAC) region, significantly contributing to the region's IPO success. In total, APAC recorded 575 IPO listings during this period, generating USD 23.7 billion. This marks a 15.6% rise in IPO proceeds compared to the same time frame in 2023, as per the report. 

The recent listings, including Bajaj Housing Finance, Ola Electric and Premier Energies, have made headlines for their stock market debuts. Current trends indicate that we are just at the beginning of a significant momentum building in the tech startup IPO space.

Moreover, several companies, including Hyundai Motor, Swiggy, the National Stock Exchange, Waaree Energies, Mobikwik, and NTPC Green, are preparing for their Dalal Street debuts. Notably, Hyundai's upcoming public offering is poised to surpass the LIC IPO size of ₹21,000 crore.

IPO boom reshaping the Indian market

The recent surge in IPO activity is not just a fleeting trend, it is fundamentally reshaping the landscape of the Indian market. With an increasing number of companies tapping the primary market, the expansion of the IPO space is significantly contributing to the overall growth of the Indian economy.

Manish Bhandari, CEO & Portfolio Manager, Vallum Capital Advisors, said, “IPO is part of the evolution cycle of capital raising in the lifecycle of a firm. This activity can help accelerate a country's economic momentum. Indian investors are shifting savings towards the financial market and it's quite natural for them to participate in IPO activities. This has resulted in the froth in the IPO market, where raising money is quite easy today. In such a scenario where greed is overpowering, investors have to due their due diligence and adhere to the maxim of caveat emptor.”

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