IPO boom: Record Rs 1.6 lakh crore raised in 2024; new year
India’s Initial Public Offering (IPO) market has reached unprecedented heights in 2024. Companies raised a staggering ₹1.6 lakh crore, marking a significant increase from previous years. This surge in fundraising is attributed to a combination of economic growth, favorable market conditions, and improvements in regulatory frameworks. The enthusiasm from both issuers and investors has created a vibrant IPO landscape, with expectations for even greater achievements in the coming year.
Historic IPOs and Record Fundraising
The year 2024 will be remembered for Hyundai Motor India’s historic IPO, which raised ₹27,870 crore, making it the largest IPO in the country’s history. This impressive figure reflects the growing confidence of companies in the Indian market. A diverse range of companies, including large, mid, and small-cap firms, took advantage of the IPO route. The average issue size rose significantly from ₹867 crore in 2023 to over ₹1,700 crore in 2024.
December alone witnessed at least 15 IPO launches, showcasing the exceptional vibrancy of the market. V. Prashant Rao, Director & Head of ECM at Anand Rathi Advisors, noted that rising retail participation, strong domestic inflows, and active involvement from foreign portfolio investors (FPIs) have laid a solid foundation for this fundraising momentum. Analysts predict that the momentum will continue into 2025, with expectations of surpassing the ₹2.5 lakh crore mark in IPO fundraising.
The upcoming year promises major offerings, including HDB Financial Services’ proposed ₹12,500 crore issue and LG Electronics India’s ₹15,000 crore public float. The IPO pipeline is robust, with 90 maiden public issues launched in 2024, far exceeding the ₹49,436 crore raised by 57 firms in 2023.
Growth in the SME Segment
The surge in IPO activity is not limited to large corporations. The small and medium enterprises (SME) segment also experienced remarkable growth. A record 238 SMEs raised ₹8,700 crore in 2024, nearly doubling the ₹4,686 crore raised in 2023. This growth reflects increasing interest in SME public offerings, although it comes with heightened risks for retail investors.
In response to this trend, the Securities and Exchange Board of India (SEBI) has introduced stricter regulatory frameworks. These include profitability requirements and a cap on the offer-for-sale (OFS) component. Additionally, a “draw of lots” system for non-institutional investors (NIIs) aims to safeguard smaller investors. Experts attribute this year’s robust IPO activity to a stable economic environment and policy continuity at the central government level.
Neha Agrawal, MD & Head of Equity Capital Markets at JM Financial Institutional Securities, emphasized that the resurgence of manufacturing and increased private capital expenditure are key contributors to this growth. Companies are increasingly looking to diversify their funding sources, shifting from debt-heavy models to equity, which strengthens their balance sheets.
Strong Investor Demand and Listing Gains
The demand for IPOs in 2024 has been exceptionally high. Several companies reported impressive subscription ratios, with Vibhor Steel Tubes seeing a staggering 320 times subscription. Other offerings, such as KRN Heat Exchanger and Refrigeration, also garnered over 200 times subscription. This strong demand translated into substantial listing gains, with over 60 companies delivering positive returns on their debut day.
Notably, Vibhor Steel Tubes, BLS E-Services, Bajaj Housing Finance, and KRN Heat Exchanger all achieved gains exceeding 100%. This reflects robust investor demand and confidence in the market. The overall performance of India’s equity markets has also been remarkable, with the NSE Nifty 50 reaching an all-time high of 26,216 points and the BSE Sensex peaking at 85,836 points in September 2024.
For companies, going public provides crucial funds for expansion, working capital, and debt repayment. It also enhances visibility and attracts new business opportunities. IPOs serve as an exit strategy for long-term investors, further fueling interest in the market.
A Promising Future Ahead
The IPO landscape in India has shown remarkable resilience and growth in 2024. With record fundraising figures and a diverse range of companies entering the market, the future looks promising. Analysts and experts are optimistic about the continued momentum in 2025, with expectations of surpassing previous records. As companies seek to capitalize on favorable conditions, investors are eager to participate in this dynamic market. The combination of economic growth, regulatory improvements, and strong investor interest sets the stage for an exciting year ahead in India’s IPO market.
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