India Inc.'s QIP parade to stretch out into new year

Taste for stocks, easing liquidity to help companies shore up more from market

- Priyamvada C

Indian companies are expected to raise more funds this year through qualified institutional placements (QIPs) of shares to finance capital-intensive projects, which could prove critical in shoring up the economy.

As many as 27 companies secured board approvals last month for raising funds from institutions, data from Prime Database showed. More companies including Shakti Pumps India Ltd and Azad Engineering Ltd are expected to secure board approval for QIPs shortly.

QIPs allow companies already listed on stock exchanges to raise funds from domestic markets to finance key projects. But even as fundraising via QIPs reached record levels in 2024, private capital expenditure remained sluggish, forcing the government to spend huge amounts, especially on infrastructure.

As of 28 December, Indian companies had raised ₹1,37,560 crore across 95 QIPs in 2024, against ₹54,350 crore from 45 issues a year earlier, as per Prime Database.

"Fundraising through QIPs is likely to continue in the current year, mainly driven by benign market conditions, good liquidity, and strong investor interest in the equity markets," said Mahavir Lunawat, managing director of financial services firm Pantomath Group.

He added that as companies have continued to focus on growth and reducing debt, they could use QIPs for more strategic initiatives such as adding capacity, acquisitions, and upgrading technology.

"...The need for increased private sector capital expenditure (capex) remains a critical driver for economic expansion," said Narendra Solanki, head of fundamental research-investment services, at Anand Rathi, adding that the domestic economy's strong fundamentals offer favourable conditions for fundraising and growth this year.