In a significant boost to the Indian primary markets, August witnessed a sharp surge in initial public offering (IPO) activity, reaching its highest level in over two years. A total of 10 companies successfully raised a cumulative Rs 17,047 crore, marking the largest monthly fundraising since May 2022, according to a report by Moneycontrol.
Of the total raised, about 57 per cent, or Rs 9,715 crore, came from fresh issue capital, while Rs 7,333 crore came from offer for sale (OFS) components.
Meanwhile, to date in 2024, 56 IPOs have raised Rs 65,000 crore, compared to just 20 IPOs raising slightly more than Rs 15,051 crore in the first eight months of 2023.
There is a renewed interest from companies looking to launch IPOs. August alone saw 25 companies filing draft red herring prospectuses (DRHPs) with the Securities Board of India (Sebi). In 2024, 92 firms filed DRHPs with Sebi, the highest number since 2021, when 120 companies filed.
Why has IPO activity increased in India?
The increase in IPO activity has been due to strong economic growth, rising Indian stock markets, and consistent strong corporate earnings, motivating more companies to go public, the report claimed.
IPO activity was sluggish in the first quarter of the ongoing financial year (Q1FY25) mainly due to the general elections. However, it has picked up since then, bolstered by favourable political outcomes, policy continuity prospects, pro-growth government initiatives, and expectations of an interest rate cut by the US Federal Reserve that is benefiting global markets, including India, the report said.
Significant IPOs in August
Ola Electric Mobility led August’s IPOs, raising approximately Rs 6,145 crore, followed by Brainbees Solutions at Rs 4,193 crore and Premier Energies at Rs 2,830 crore.
Other significant IPOs included Ceigall India (Rs 1,253 crore), Bazaar Style Retail (Rs 835 crore), ECOS India Mobility & Hospitality (Rs 600 crore), and Interarch Building Products (Rs 600 crore).
What is causing investor interest in IPOs?
Many IPOs are oversubscribed on their opening day, as investors are drawn to the primary market amid high valuations in the secondary market. Additionally, strong listing-day returns from recent IPOs continue to attract investors. Several IPOs are trading at a grey market premium between 20 and 100 per cent above their price band, the report noted.
Among the heavily subscribed IPOs in August, Unicommerce eSolutions led with a 168.35 times subscription, followed by Orient Technologies at 155 times, and Saraswati Saree Depot at 108 times.
Other notable IPOs included Premier Energies, ECOS India Mobility & Hospitality, and Akums Drugs and Pharmaceuticals, with subscription levels of 75 times, 65 times, and 63 times, respectively.
First Published: Sep 04 2024 | 11:38 AM IST