The Indian IPO market experienced unprecedented growth in 2024, raising ₹1.6 lakh crore through nearly 90 maiden public issues, according to recent reports. This record-breaking year is backed by favorable market conditions, strong economic growth, and significant regulatory improvements, creating opportunities for many companies.
On December 27, five mainboard IPOs and one SME issue were successfully listed on the stock exchanges. Notably, Mamata Machinery's IPO was marked as exceptional, debuting at ₹600 per share, representing a remarkable 147% premium over its issue price of ₹243. The intense demand for this IPO was evident as it was oversubscribed by 195 times across all investor categories.
Mamata Machinery specializes in manufacturing equipment for the packaging industry, and the funds raised from its ₹179 crore IPO were aimed at realizing the benefits of being publicly listed. The phenomenal subscription rates included 274.38 times for non-institutional investors and 235.88 times for qualified institutional buyers (QIBs).
Transrail Lighting, another notable entrant, listed its shares at ₹590 on the NSE—up 36.57% from its issue price of ₹432. Their ₹839 crore IPO consisted of new shares and an offer for sale by the promoter, reflecting the company’s strong positioning within the power transmission and distribution sector.
Another company, DAM Capital Advisors, provided its shares at ₹393 per share on listing, reflecting its solid tripling of demand with oversubscription reaching 81.8 times. DAM Capital Advisors focuses on investment banking and related financial services, illustrating the diverse opportunities the IPO market has opened for different sectors.
Sanathan Textiles also marked its entry by listing at ₹422.3, significantly up from its issue price of ₹321, fulfilling its plan to utilize proceeds for debt repayment and business expansion. Concord Enviro Systems made its debut with shares opening at ₹826, reflecting its anticipated success following oversubscription of 10.67 times during the bidding phase.
Overall, 2024 is described as historic for the Indian primary market, with 91 mainboard companies raising funds and only four pending listing by year’s end. Reflecting on the phenomenal activity, Praneet Singhal of 1Lattice remarked, "During the first 11 months of the year, mainboard IPOs witnessed an average subscription of 65 times, reflecting significant investor enthusiasm."
The IPO craze can be attributed to vibrant midcap and small-cap segments, along with positive economic forecasts. Stock market analysts commented on the influx of new-age startups, evidenced by significant fundraising from companies like Swiggy, Mobikwik, and Ola Electric Mobility, who collectively raised over ₹29,000 crore.
Despite the excitement, some experts caution against potential pitfalls. Siddharth Oberoi, Founder at Prudent Equity, remarked, "While many IPOs posted solid gains, the average allocation for small investors is just 1-2%, limiting their overall portfolio impact." This points to the necessity for strategic asset allocation and position sizing to maximize returns from IPO investments.
Interestingly, the market has also seen shifts toward sectors like renewable energy, defense, and aerospace, showcasing investor confidence. On the regulatory front, favorable reforms have supported steady market momentum, even amid significant foreign institutional investor (FII) outflows.
Looking forward, the IPO outlook appears promising for 2025 as over 34 companies have received approval to raise ₹41,462 crore, with 55 others awaiting clearance for ₹98,672 crore. By compound estimates, the IPO market is on course to exceed ₹2 lakh crore, as projected by Mahavir Lunawat, Managing Director of Pantomath Capital.
With nearly 143 Draft Red Herring Prospectuses (DRHPs) filed so far, market implementations are expected to pave the way for expanded opportunities, fueling India’s economic growth. The trends suggest imminent growth, with new-age companies exploring the primary market, defining the future of the Indian stock market.
Overall, 2024 set up the stage for what could become a defining moment for retail investors and businesses alike, showing them the value and potential of engaging with initial public offerings. The future looks bright as new avenues for growth open up, promising diversification and investment potential.
