A record 41 companies submitted their intention to go for IPOs with SEBI in 2024, which can be labeled as an all-time high. Some of the leading Indian targets that are planning to list are NTPC Green Energy, Hexaware Technologies, and Vikram Solar, arguing that the public markets remain healthy.
67 firms have filed their DRHP with SEBI and have yet to get a go-ahead to float the market. Also, only one company is within the confidential filing, which is the preliminary stage for IPOs. Reflecting on the growing confidence of businesses to access public capital markets, this strong pipeline of companies is preparing for IPOs.
Aditya Infotech, Varindera Construction, Vikran Engineering, and Mauri Tech are some firms that are expected to list their shares in the market soon. Such sectoral distribution shows that companies in different fields want to benefit from the current market situation, which has been generally good for IPOs.
As of September 30 30, 2024, 239 IPOs had been floated, and most were promising on their first trading. Of these, 175 IPOs commenced trading higher than their issue price and 10 at the issue price level. While 33 IPOs opened at or below the issue price, all thirty-three traded higher than the offer price in early September. This increasing tendency indicates the freshness of the market and high levels of investors’ interest.
However, 183 of the IPOs listed by September 30, 2024, are still floated at a price above the initial public offering, further enhancing investor confidence in such new market offerings. Moreover, the average listing gain of IPOs has been a whopping 27%, and some IPOs rose by as much as 114 % by September 2024, which has become a popular investment for retail investors.
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With the increase in global crude prices, do you think petrol prices in India will rise?
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Individual investors are fiercely pursuing the IPO gains, but especially by institutional investors. SEBI data also shows that about 50% of the shares offered to the small investors were traded within a week of the listing, while 70% within one year. The benchmark emerging market index revealed that while investors sold shares with listing gains at very short periods, they held on to those listed at a loss. Notably, while 67.65% of the shares by the value of IPOs that delivered a return greater than 20% were traded in the first week, the same was only accurate for 23.3% for IPOs with negative returns.
The IPO market in India has been highly influenced by regulations made by the SEBI and Reserve Bank of India RBI in April 2022. After SEBI corrected the fields of Non-Institutional Investor (NII) share allotment, it brought about the change and the amendment of RBI’s rules regarding IPO financing for Non-Banking Financial Companies (NBFCs). Such changes resulted in a reduction in the NII oversubscription rate from 38 times to 17 times. Equally important, high-value NII applications averaging 626 in each IPO have been reduced to the extent of 20 after some policy changes indicating investors’ behavior changes.