RIDING THE IPO WAVE

The market's appetite for public offers seems insatiable, with companies raising nearly Rs 60,000 crore in five months, or 90 per cent of the total amount raised in FY24

- Ashish Sinha

THE MARKET for initial public offer (IPOs) continues its impressive surge in the fiscal year 2024-25 (FY25). In just the first five months, a remarkable almost Rs 60,000 crore has been raised, with over 135 IPOs launched, and several more waiting to be launched. So far, nearly 80 per cent of these IPOs have originated from small and medium enterprises (SMEs). Despite the dominance in numbers by SMEs, mainboard IPOs have contributed nearly 90 per cent of the total funds raised, highlighting the significant financial heft these larger offerings bring to the market.

To put this in perspective, in the entirety of FY24 (April 2023-March 2024), there were 78 IPOs that collectively garnered Rs 67,561 crore. The total investor response during this period was staggering, with expressions of interest amounting to Rs 23,96,670 crore. “This translates to an oversubscription rate of 35.47 times,” says Mahavir Lunawat, Managing Director of Pantomath Capital Advisors. He further explains that the average IPO size was below Rs 1,000 crore, accounting for the high volume of IPOs seen during FY24.

The sustained IPO boom can be attributed to several factors. Market experts point to favorable market conditions, robust economic growth, easing inflation, and stable interest rates as primary drivers. “The biggest reason is India’s strong macro environment, which has raised investor confidence,” states a senior market analyst. The performance of many newly listed stocks over the past one to two years has also enticed investors, hoping for similar returns from new IPOs.