Is India’s public offering market buzzing again?
₹48,879 crore, and another 26 awaiting the market regulator’s approval. This will keep the D-street busy—but will these issues be received with the same enthusiasm as seen earlier? Common source: Primedatabase.com, BSE, NSDL, Capitaline, Mint analysis With the secondary markets recovering after the Adani group debacle, the primary market seems to be fast gearing up to play catch-up. Six issues hit the markets in the June quarter, and a few more are planned this month.
However, this year, companies have managed to mobilize only 7% of the all-time high IPO proceeds hit in 2021. The fundraising through IPOs continues to be driven by offers for sale (OFS), a route for existing shareholders to sell their holdings in the firms going public. Over the last decade, 71% of the amount, on an average, was mobilized through this route, and in the year so far, the share has been 75%.
Meanwhile, the S&P BSE IPO index, which measures the performance of companies listed on the BSE for one year after the completion of their IPOs, has surpassed the 30-share Sensex by a wide margin in 2023 so far. This indicates the bullish sentiment in capital markets. “The rally in the secondary market seems to be extending to the primary markets as well.
Importantly, another reason for IPOs doing well recently is due to the reasonable valuations," said Prashant Rao, director and head equity capital markets, Anand Rathi Investment Banking. The companies listed this year have had average listing gains of 12%—not as good as 2021 (32%), but slightly better than 2022 (10%). But the decline in IPO fortunes since 2021, the year of the boom, is evident from how they are faring now: around a third of the stocks listed since 2021 are trading below their
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