The year 2024 has emerged as a stellar one for the Indian primary market, witnessing an unprecedented surge in activity. Companies from diverse sectors—including technology, consumer goods, green energy, and financial services—have successfully debuted on Indian stock exchanges, capitalising on favourable market conditions.
High-profile companies like Swiggy, Hyundai Motor India, Bajaj Housing Finance, Premier Energies, FirstCry, Ola Electric Mobility, and TBO Tek have listed their shares on exchanges, providing an opportunity for investors to participate in their growth journey.
According to data from Trendlyne, 302 companies across both mainboard and SME categories have successfully raised funds so far this year, marking a sharp increase from the 238 listings recorded in 2023. Of the 302 IPOs, 204, or 67.54%, are currently trading above their issue prices.
The SME segment has been a key driver in this activity, accounting for 227 of the listings. These offerings have drawn significant attention from retail investors, many of whom have been attracted by the potential for substantial listing gains.
Notably, 133 SME IPOs achieved subscription rates exceeding 100 times, with 23 surpassing an extraordinary 500 times in retail subscriptions, underscoring the massive retail participation in this segment.
Reflecting the strong performance of SMEs, 156 IPOs are currently trading above their issue prices, with Owais Metal and Mineral Processing leading the charge, trading a remarkable 1,286% higher than its issue price. Additionally, 67 IPOs are trading 100% higher than their issue prices, a clear indicator of the market's enthusiasm for this space.
The mainboard segment, too, experienced substantial activity, with 75 companies from various sectors making their market debuts in 2024. This segment has similarly seen overwhelming investor demand, as 21 IPOs recorded subscription rates exceeding 100 times, indicating broad-based investor interest across diverse industries.
Currently, 48 IPOs are trading above their issue prices, with eight of them seeing gains of over 100%. Among the top performers, Jyoti CNC Automation leads, trading 268% higher than its issue price. It is followed by KRN Heat Exchanger and Refrigeration, Platinum Industries, and Premier Energies, with their stocks trading 140% to 260% above their issue prices.
The surge in IPO activity on Dalal Street can be attributed to stable macroeconomic fundamentals, enhanced market liquidity, and a significant increase in retail investor participation. This strong investor interest has not only resulted in robust subscription rates but has also expanded the investor base considerably. This is evident from a marked rise in demat account openings, highlighting the growing enthusiasm among individuals keen to invest in IPOs, especially in the SME segment.
Moreover, elevated valuations in the secondary market have prompted foreign portfolio investors (FPIs) to shift their focus towards the primary market, adding another layer of activity to the ongoing IPO boom. Although FPIs have withdrawn substantial funds from listed stocks in recent months, their capital has been redirected into new offerings, driven by attractive valuations.
Meanwhile, retail investors, motivated by the potential for multibagger returns on listing day, have flocked to bid for nearly every SME IPO. This surge in retail participation has encouraged more mid- and small-sized companies to tap exchanges to raise funds, further fueling the IPO frenzy.
However, this heightened surge in retail participation has also raised concerns about potential market manipulation, prompting exchanges to implement a 90% price cap on SME IPOs to prevent excessive speculation and ensure a more balanced market environment.
India’s exceptional performance has placed it at the forefront of the global IPO landscape. According to a report by Ernst & Young India, the country accounted for a commanding 36% share of global listings in Q3 2024, surpassing the United States, which contributed just 13%.
The report also highlighted that India recorded its highest quarterly IPO activity in two decades, with 27 mainboard IPOs in the third quarter—a 29% rise compared to Q3 2023. These listings collectively raised $4.27 billion ( ₹36,027 crore), marking a 142% year-on-year increase in funds raised.
With a robust pipeline of upcoming IPOs, the momentum in the primary market is likely to continue in the months ahead.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
