Buzzing Street: Small deals drive best IPO month since January 1997

September has emerged as the strongest month in nearly three decades for initial public offerings (IPOs) across both the mainboard and the small and medium enterprise (SME) platform. 

By the end of the month, including four issues slated to open next week, as many as 25 IPOs will have hit the main market, the highest monthly count since January 1997. Meanwhile, 56 SME offerings have been launched, the most since the segment was created in 2012 to help smaller firms tap equity markets. 

Most of the activity has been in the small-cap space, with average mainboard deal sizes at around ₹530 crore, even as larger companies have preferred to play the waiting game. 

The surge in primary fundraising has come amid the turbulence in secondary markets, driven by foreign portfolio investor (FPI) outflows, a weakening rupee, US’ moves on H-1B visas, and higher tariffs on exports. 

Market participants attribute the deluge to a mix of pent-up demand and regulatory deadlines. “The lull between March and May created a build-up of deals. Companies also wanted to complete fundraisings before the September 30 deadline for updating financials in draft prospectuses. In addition, budget planning for the second half of the year led several firms to fast-track their listing plans,” said Mahavir Lunawat, founder of Pantomath Financial Services Group. 

Pranav Haldea, managing director at Prime Database Group, agreed, citing a “confluence of domestic liquidity, strong subscription patterns, healthy post-listing performance, and the approaching September deadline” as the triggers behind the record activity. 

If the pipeline is an indication, the IPO momentum is expected to sustain going ahead. 

Currently, about 70 companies with plans to raise over ₹1 trillion already have Sebi approval, while another 90 firms are awaiting the regulator’s nod to mobilise an estimated ₹1.6 trillion. 

While the primary market is thriving on buoyant retail flows, secondary markets remain under pressure due to persistent FPI selling. In fact, the liquidity being drawn toward IPOs is one reason broader indices have struggled to deliver returns over the past year, said Suresh Ganapathy, managing director and head of financial services research at Macquarie. 

During 2024, firms raised a record ₹1.6 trillion through IPOs. To surpass that milestone, over ₹74,000 crore would need to be mobilised in the remaining three months of this year. 

Industry experts say the final tally could come close to last year’s record, provided some of the large-ticket offerings manage to hit the market. Several billion-dollar-plus IPOs, including those from Tata Capital, Groww, and LG Electronics India, are lined up for launch next month.