India’s IPO Rush: 336 companies go public in Samvat 2080, dominated by SMEs

Indians across the country are celebrating the festival of lights—Diwali—today, a joyous occasion that brings together families and communities in a vibrant display of tradition and culture. Today also marks the beginning of Samvat 2081, the start of a new Hindu calendar year. 

In the world of the stock market, investors have an additional reason to celebrate this festival with even greater joy. During Samvat 2080, the Indian stock market reached remarkable milestones, surpassed all analysts' estimates and established new historic achievements. Despite the sharp downturn in October, the Indian frontline indices concluded Samvat 2080 with over 25% gains. 

Over the past year, much of the activity focused on the primary markets, with a wave of companies listing their shares on Dalal Street. The surge in retail participation has encouraged many firms to turn to financial markets for fundraising, leveraging the favorable conditions to capitalize on investor interest.

Particularly, retail enthusiasm has been directed toward SME IPOs, as many smaller enterprises entering the public markets this past year have received overwhelming responses. Retail investors are drawn to these IPOs, eager for high returns and the chance to engage with companies in their early growth stages. This wave of interest has even prompted multiple advisories from SEBI, the market regulator, urging caution.

Meanwhile, volumes from offer-for-sale (OFS) transactions have also spiked up, with private equity (PE) and venture capital (VC) investors taking the opportunity to exit through both primary (IPO) and secondary (block deal) market routes. Benefiting from bullish conditions in the secondary market, PE firms have strategically divested their stakes, either in part or entirely.

Small investors, big impact

Once dominated by institutional investors, India’s primary market is now seeing a significant shift, with retail participation driving demand due to the allure of strong returns and easier access to financial markets. Over the past year, it has become increasingly rare to find an SME IPO that hasn’t been fully subscribed in the retail category.

The IPO mania has significantly expanded the investor base, with registered demat accounts in India now reaching the 17-crore mark, according to the latest CDSL data. On average, 40 lakh demat accounts are being opened each month by retail investors in recent months.

Many offerings during Samvat 2080 have been oversubscribed by substantial margins, with some retail portions reaching up to 2,000 times the available bids.

The past year has also been eventful for new-age tech startups, with names like Go Digit, Awfis, TBO Tek, and Ola Electric, which made significant strides on Dalal Street. The Indian capital market has also become a premier destination for global corporations seeking public listings.

Hyundai India made its market debut in October. Additionally, reports suggest that LG and several other international firms are preparing to launch their public listings in India, further underscoring the market’s growing global appeal.

Capital markets are currently playing a crucial role in India's growth, with an increasing share in capital formation and the investment landscape driven by technology, innovation, and digitisation.

336 companies join Indian bourses

Amid strong interest from retail investors, 336 companies have made their stock market debuts in Samvat 2080, with 248, or 74%, coming from the SME segment, according to Trendlyne data.

Nearly 100 of these IPOs have launched with listing gains exceeding 50%, while 132 saw subscription rates surpassing 100%, led by HOAC Foods India with an impressive subscription rate of 1,834 times.

Notably, 163 IPOs are currently trading above their issue prices. Among the highest performers, Owais Metal and Mineral Processing is trading at 1,416% above its IPO price, followed by Australian Premium Solar (India) with gains of 766% over its issue price.

The exceptional listing gains have attracted the attention of the exchanges, which imposed a cap on listing gains at 90% starting in June. Since the SME platform launched on stock exchanges in 2012, the market has grown substantially, raising over ₹14,000 crore in the past decade, including approximately ₹6,000 crore in 2023-24 alone, according to SEBI data.

Some experts note that SME IPOs are often priced with high valuations. However, retail investors are largely focusing on potential listing day profits rather than valuations, while others make investment decisions based on the reputation and track record of the merchant bankers involved.

Meanwhile, 88 companies from the main board segment made their debut on exchanges, with Hyundai India’s IPO standing out as the largest in terms of issue size, as the Korean car maker successfully raised ₹27,870 crore from Indian investors. Other notable IPOs include Bajaj Housing Finance, Ola Electric Mobility, Waaree Energies, Brainbees Solutions, and Aadhar Housing Finance.

Among main board IPOs, Vibhor Steel Tubes recorded the highest subscription rate at 298 times, while an additional 49 IPOs saw subscription rates exceeding 50%.

In terms of bumper listing gains, Vibhor Steel Tubes topped the list, with shares debuting 195.5% higher than their issue price. BLS E-Services also made a strong entrance, with shares listing at a gain of 171.1%. Meanwhile, Tata Technologies saw its shares listed at 162% above their issue price.

Looking ahead in Samvat 2081, the Indian IPO market is set for a promising run, as the success of multiple listings over the past year is likely to encourage more companies to seek funding from investors. High interest rates in the economy is also expected to bolster fundraising activity. 

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.