Average IPO size hits four-year low in 2023 to Rs 867 crore, shows data

IPO fundraising drops 17% Y-o-Y to 49,434 cr last year

The average initial public offering (IPO) size reached a four-year low in 2023 as the year was dominated by smaller-sized issues. Last year, the average IPO size shrank to Rs 867 crore, the lowest since Rs 773 crore in 2019, according to the Prime Database report.

The average IPO size in 2020 was Rs 1,774 crore. It was Rs 1,884 crore and Rs 1,483 crore in 2021 and 2022, respectively.

Thirty-eight of the 57 IPOs in 2023 had an issue size of less than Rs 867 crore and only a third of the total IPOs had an issue size above Rs 1,000 crore.

Mankind Pharma, which raised Rs 4,326 crore, was the biggest IPO of the year, followed by Tata Technologies (Rs 3,042 crore), JSW Infrastructure (Rs 2,800 crore), India Renewable Energy Development Agency (IREDA) (Rs 2,150 crore), RR Kabel (Rs 1,964 crore), and Cello World (Rs 1,900 crore).

Investment bankers said some large issuances in the previous years had skewed the average issue size.

"In the next year, we will see the IPOs of new age companies coming back, and the average ticket size could go up,” said Ajay Saraf, executive director of ICICI Securities.

The trend of same-sized companies dominating the IPO market also reflected the mood in the secondary market, where small and midcap stocks stole a march over the largecaps. In 2023, the Nifty Midcap 100 index gained 46.6 per cent while the Nifty Small Cap 100 rose 55.6 per cent against the Nifty gain of 20 per cent.

"Investors believe the potential for growth and higher returns is in companies with smaller market capitalisation. Some large-sized issues in the past came with muted growth numbers and did not deliver returns post-listing. But we expect the foreign portfolio investments (FPI) will be more robust this year as rate cuts are likely to happen and larger issues could hit the markets,” said Ajay Garg, managing director of Equirus Capital.

In 2023, 57 companies raised Rs 49,434 crore through IPOs, 17 per cent lower than the previous year's Rs 59,302 crore raised by 40 IPOs. The outlook for next year is robust, with 27 companies proposing to raise Rs 28,500 crore holding Sebi approval, and another 36 companies looking to raise Rs 40,500 crore are awaiting the regulator's nod, the report said.