Outlook for equities may be dimming, but IPOs retain allure
Subscribe to enjoy similar stories. IPO activity in India has hit a new peak this calendar year, with the total issue size amounting to ₹1.38 trillion – the highest in a decade, surpassing the previous peak of ₹1.31 trillion in 2021.
Looking ahead, the big question is: will this momentum continue in the face of increased volatility and corrections in equities? “On the IPO front, momentum remains strong in India, with around 87 companies currently filing for IPOs with Sebi (Securities and Exchange Board of India)," said Neha Agarwal, managing director & head of equity capital markets at JM Financial Institutional Securities. Also read: The best and worst IPOs of 2024.
And next year’s big 3. Analysts expect profitable companies with large free cash flows to perform well in the current IPO cycle as investors are leaning toward firms with a stable financial outlook.
Agarwal said, “This trend is likely to persist, especially for businesses with strong fundamentals and resilience against macroeconomic pressures". Prashant Rao, director and head of equity capital markets at Anand Rathi Investment Banking, noted that while recent IPOs have faced some short-term resistance, with low subscription levels and listing gains, the long-term outlook for the primary market remains strong.
According to a recent note by Axis Mutual Fund, “IPO pipeline for the second half of the (fiscal) year is nearly three times the amount raised in the first half, with 91 companies looking to raise $17 billion in aggregate." In recent weeks, another 70 listed companies have received board approval to raise a total of $16 billion through qualified institutional placements (QIPs). Additionally, secondary stake sales from promoters and private equity are
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