India Inc set to raise over Rs 1 lakh cr via IPOs in FY25

In the fiscal year 2023-24 (FY24), as many 76 companies tapped into the public markets through mainboard IPOs, raising nearly Rs 62,000 crore, a 19 per cent increase compared to the previous fiscal year. “The average first-day gains stood at 28 per cent. Meanwhile, over 70 per cent or 55 stocks, are still trading above their issue price. The gains can be attributed to several factors. The buoyant secondary markets, the enthusiastic participation of retail investors in IPOs, and the strong flows from institutional investors played a significant role in these gains,” it said.

Bankers say the IPO market is buzzing with anticipation as a multitude of innovative and captivating offerings are poised to hit the market, buoyed by India’s robust economic growth. With FY2025 on the horizon, expectations are high for yet another stellar year for IPOs. This optimism is fuelled by a confluence of factors, including the surge in domestic capital, enhanced governance practices, the vibrant spirit of Indian entrepreneurship, and favourable government policies bolstered by FDI support. Moreover, the landscape is enriched by the rising tide of financial literacy and the unwavering commitment of institutional investors.

Mahavir Lunawat, Managing Director, Pantomath Capital Advisors, said, “With a diverse array of offerings and a fervent appetite for growth capital, the IPO landscape in FY2025 promises to be dynamic and vibrant, offering exciting opportunities for investors and companies alike. We anticipate that equity-raise through IPOs in FY25 could exceed Rs 1 lakh crore. This figure could potentially increase even further if there are no global shocks affecting the Indian market.”

“The resurgence of private capital, substantial job creation, significant reductions in subsidy leakages, judicial reforms, and unprecedented infrastructure development will lead to a market opportunity of unprecedented scale in recent human memory,” said Deena Mehta, Managing Director, Asit C Mehta Investment Interrmediates.

“These factors are certain to propel the Indian economy into a new era, driven by both domestic consumption and export-led growth. Already, the economy is experiencing remarkable demand expansion across various sectors, fostering cost efficiencies and innovation,” Mehta said.

In FY24, the Nifty 50 ended the session with a 29 per cent gain, and the Nifty Small cap 100 and the Nifty Midcap 100 index gained 70 per cent and 60 per cent, respectively. Mutual funds bought shares worth Rs 1.9 lakh crore while foreign portfolio investors were net buyers worth Rs 2 lakh crore. The S&P BSE IPO Index, a gauge tracking the after-listing performance of newly listed companies, rose 69 per cent this financial year. The rally in the small and midcap segments has also benefited newly listed stocks because most belong to this basket. The overall public equity fundraising, including from FPOs, OFS, and other avenues, increased by 142 per cent to Rs 1.86 lakh crore in FY24 from Rs 76,911 crore in FY23.

The response of retail investors to IPOs in 2023-24 was also higher compared to the previous financial year. The average number of retail applications rose to 1.3 million from about 0.6 million in the previous financial year. The response was due to strong post-listing performance. The average listing gains rose to 29 per cent in FY24 against 9 per cent in the previous financial year.