IPO fundraise thus far in 2024 third highest in primary market history

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IPO fundraising in 2024, IPO 2024: Fund raising through initial public offers (IPOs) recorded a robust performance thus far in calendar year 2024 (CY24), with 60 companies having raised Rs 63,985 crore via mainboard offerings. This is also the third highest amount in the history of the primary market in a calendar year, and 29 per cent higher as compared to the previous calendar year 2023 (CY23), data from PRIME Database show.

A total of 57 companies had collectively raised Rs 49,436 crore via the IPO route in CY23, PRIME Database data suggests. In CY21, as many as 63 companies had raised Rs 1.19 trillion through IPOs, including the mega Life Insurance Corporation of India (LIC) IPO. While, in CY17, total 36 companies had mobilised Rs 67,147 crore via IPOs, data shows.

The fundraising via IPOs likely to hit a new peak as automaker Hyundai Motor India (Rs 25,000 crore) and Swiggy (Rs 11,000 crore), one of India's leading food and grocery delivery platforms have got the market regulator Securities and Exchange Board of India’s (Sebi’s) approval for raising funds.

So, what’s behind the IPO frenzy?

Investors, according to G Chokkalingam, founder and head of research at Equinomics Research, have tasted success with a few IPOs recently, which is luring them to the primary markets in droves.

“Companies, too, are leaving something on the table for the investors when pricing the issues. This in turn is also luring investors. That said, a large part of the success of issues is attributed to the rally in the mid-and small-cap stocks in the secondary markets despite valuation concerns in many. A stability in these two segments is giving a moral boost to unlisted companies in these segments to tap the markets for funds,” he said.

Upcoming IPOs in 2024

Meanwhile, the IPO pipeline for the remaining part of CY24 remains strong. 25 companies plan to raise nearly Rs 63,550 crore and have Sebi’s approval. Another 48 companies are looking to raise about Rs 91,805 crore and are awaiting Sebi approval, data shows.

Besides Hyundai and Swiggy, Afcons Infrastructure (Rs 7,000 crore), the flagship construction company of the Shapoorji Pallonji Group, Tata Play (Rs 2,500 crore), formerly Tata Sky, and SK Finance (Rs 2,200 crore) have got Sebi approval for raising funds via the primary market.

NTPC Green Energy (Rs 10,000 crore), Hexaware Technologies (Rs 9,950 crore) and Vishal Mega Mart (Rs 8,000 crore) are among those waiting for approval, data shows.

Sector-wise, automobiles and its related companies top the list fundraisers list and plan to raise Rs 32,712 crore via IPOs. Financial services propose to mobilise Rs 17,168 crore, followed by power generation (Rs 17,000 crore), information technology (Rs 11,150 crore), household & personal products (Rs 8,500 crore), foods & food processing (Rs 8,300 crore) and roads & highways (Rs 7,000 crore).

There is enough liquidity sloshing around now, said Gaurang Shah, senior vice-president at Geojit Financial Services, which is not only keeping the secondary markets buoyant but also keeping primary markets buzzing.

“Earlier, people were worried that the money would flow out of the secondary markets into the primary markets. This is not the case now. That said, one needs to remember that every IPO will not give a double or a triple-digit return to investors. They should opt for good quality companies that have revenue visibility and the issue is priced reasonably,” he said.

Thus far in CY24, BSE Sensex has surged 17.6 per cent to hit the 85,000 mark earlier this week. The rally was led by strong buying from both foreign institutional investors (FIIs) and domestic institutional investors (DIIs), who bought stocks worth Rs 89,867 crore and Rs 3.18 trillion, respectively in CY24.