IPO Market Set For Record-Breaking Diwali

IPOs worth Rs 50,000 crore including Hyundai, NTPC Green Energy and Swiggy are set to hit the market in late October or early November.

The stage appears set for the launch of initial public offerings (IPOs) worth over Rs 50,000 crore (Rs 500 billion) around Diwali -- in late October or early November.

Among the major upcoming offerings is carmaker Hyundai Motor India's IPO, which is expected to become the largest-ever in the country at over Rs 25,000 crore (Rs 250 billion).

In tow are foodtech major Swiggy's issue with an estimated size of Rs 11,600 crore (Rs 116 billion) and renewable power player NTPC Green Energy's Rs 10,000 crore (Rs 100 billion) offer.

If these IPOs are successfully executed, they could further cement India's position as a major global market power, while encouraging more companies to consider listing in the country, where valuation premium is among the highest globally.

In addition to the aforementioned marquee IPOs, offerings by Shapoorji Pallonji Group's Afcons Infrastructure (an infrastructure construction firm), which could raise over Rs 6,500 crore (Rs 65 billion), and solar panel manufacturer Waaree Energies, expected to seek a mopup of Rs 7,500 crore (Rs 75 billion), are in the pipeline.

Market experts suggest that these IPOs could cap a record-breaking year for India in terms of equity capital raising.

So far 2024, 63 firms have launched IPOs, amassing Rs 64,559 crore (Rs 645.59 billion), and should these planned offerings proceed as anticipated, total fundraising could exceed Rs 1.2 trillion -- the highest on record.

In terms of the number of IPOs, 2024 is shaping up to be the strongest year since 2007, which saw 100 listings.

South Korean auto major Hyundai Motor's Indian arm and SoftBank-backed Swiggy have both received regulatory approval for their IPOs.

Sources indicate that bankers are actively engaging with potential investors to finalise valuations, which will ultimately determine the sizes of these IPOs.

State-owned NTPC Green Energy, a wholly-owned subsidiary of NTPC, India's largest power producer, filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India last week, and is pushing for a swift approval to hit the market next month.

"Hyundai Motor India's IPO signals that more multinationals are keen to list their Indian subsidiaries, marking a reversal from the earlier trend of Indian firms seeking overseas listing for better valuations," noted Deepak Kaushik, group head of equity capital markets at SBI Capital Markets.

"This will be the first carmaker to hit the Indian market since Maruti Suzuki's IPO in 2003. India's equity market has evolved into one of the largest globally."

Investment bankers attribute the buoyant sentiment to robust demand from both institutional and retail investors, providing issuer companies with the valuation confidence needed to enter the market.

"Market inflows are healthy from both domestic and foreign institutional investors, as well as retail participants. Mutual funds, in particular, are sitting on a lot of cash and that needs to be deployed," said Kaushik.

Thus far in 2024, domestic institutional investors have been net buyers to the tune of Rs 3.23 trillion, while foreign portfolio investors (FPIs) have acquired shares worth Rs 92,345 crore (Rs 923.45 billion), ensuring robust demand both during and after IPO listing.

The BSE IPO Index, which tracks newly listed firms, has surged 31.3 per cent compared to a 17.5 per cent gain in the Sensex this year, so far. Both equity benchmark indices -- Sensex and Nifty -- are hovering at record highs.

Bankers highlighted that Swiggy, which has revolutionised the Indian e-commerce landscape, is coming to market at a time when such companies are focusing on profitability.

NTPC Green Energy's upcoming issue underscores the broader shift towards renewable energy.

"In the coming months, you will see many more IPOs from the renewable energy sector hitting the market," said an investment banker.

"The pipeline is far more promising than it was before, and next year is expected to be even more exciting."

Feature Presentation: Ashish Narsale/Rediff.com