Mainboard initial public offerings (IPOs) have exceeded the mark of Rs 1 lakh crore in fundraising this year and this milestone has been achieved for only the second time in history.
Altogether, 70 IPOs have been launched this year— the highest since 2007. Collectively, they have raised over Rs 1.03 lakh crore. In 2007, 100 IPOs were launched, raising Rs 34,179 crore.
Earlier, in 2021, 63 companies raised over Rs 1.19 lakh crore through IPOs. With more than two months to go before the year ends and several major IPOs expected such as Swiggy, NSDL, and NTPC Green Energy, analysts predicted that this record is likely to be surpassed.
Swiggy Ltd, which is expected to launch its IPO in November, is likely to raise around Rs 11,000 crore. Other expected IPOs to make their debut in the capital markets include ACME Solar Holdings Ltd (Rs 3,000 crore), NSDL (Rs 4,500 crore), Asirvad Micro Finance (Rs 1,500 crore), NTPC Green Energy (Rs 10000 crore), One Mobikwik Systems Ltd (Rs 700 crore), Vishal Mega Mart Ltd (Rs 8,000 crore), and SK Finance (Rs 2,200 crore).
Nirav Karkera, Head of Research, at Fisdom, said, "The primary market pipeline looks robust. We can expect a series of heavyweight IPOs to mark their public market debut over the next couple of quarters. Many in this line-up would feature a common theme of higher OFS [offer for sale] components as private market institutional investors seek an exit through the listing route. Amid an overall conducive fundraising environment, many listed entities may seek to accelerate on fundraising plans via robust QIPs [qualified institutional placements] as well."
Indian capital markets have experienced significant capital influx through IPOs and QIPs since July, with a combined fundraising of over Rs 1.2 lakh crore. Fundraising via IPOs crossed over Rs 65,000 crore in the last three months alone. One of the biggest IPOs was Hyundai Motor Ltd; which raised over Rs 27,000 crore, followed by Bajaj Housing Finance Ltd and Ola Electric Mobility Ltd, which raised over Rs 6,560 crore and Rs 6,145 crore, respectively. During the same period, QIPs have contributed over Rs 50,000 crore to the total fundraising efforts.
Analysts suggested that the recent surge in IPO activity and strong gains in certain listings are primarily driven by three key factors.
First, high market liquidity has resulted in exaggerated price movements, especially in smaller, less liquid SME (small and medium enterprise) stocks, as investors chase high returns, while often disregarding underlying risks.
Second, the fear of missing out (FOMO) on quick profits has fueled continued investment in IPOs.
Lastly, increased participation from retail investors has amplified overall interest in these offerings. Currently, there are no signs that this IPO frenzy is slowing down anytime soon.
Vaibhav Porwal, Co-founder, of Dezerv, is of the opinion that the IPO frenzy might persist in the short term, even though risks like market corrections and regulatory interventions could temper the heightened activity. Investors should exercise caution and focus on fundamentals, he advised.
SME IPOs have also witnessed significant fundraising activity. So far, around 215 SME IPOs have been launched, raising a record Rs 7,700 crore. In comparison, 182 firms launched their IPOs last year, raising over Rs 4,686 crore.
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