Vivek Kaul: Today’s IPO frenzy can’t be attributed to India’s growth story

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Subscribe to enjoy similar stories. Bajaj Housing Finance recently entered the primary market with an initial public offering (IPO), aiming to raise ₹6,560 crore, but it drew bids exceeding ₹3.2 trillion. Similarly, PN Gadgil Jewellers sought to raise ₹1,100 crore and received bids of over ₹48,000 crore.

Saraswati Saree Depot, targeting ₹160 crore, garnered bids surpassing ₹17,000 crore. Boss Solutions, which wanted to raise just ₹8 crore, ended up with bids of close to ₹1,100 crore. These examples reflect the current IPO frenzy in India.

Data from Chittorgarh, a portal specializing in IPO data, suggests that 2024 has seen 59 IPOs raising a total of ₹63,862 crore, with the average IPO being subscribed many times over. Further, as the Reserve Bank of India’s latest State of the Economy report says: “September is set to be the busiest month for IPOs… in 14 years, with over 28 companies entering the market so far." It also points out that “India accounted for the highest number of IPOs globally (27 per cent by volume) in [the first half of] 2024." So, what’s really happening here? Why is a company looking to raise ₹6,560 crore ending up with bids of over ₹3.2 trillion. Or why is a company looking to raise ₹8 crore ending up with bids of close to ₹1,100 crore? Do these companies have unique business models expected to throw up a lot of money in the years to come? Take the case of Bajaj Housing Finance, which is primarily in the home loans business as a non-banking finance company.