OFFERS & OPPORTUNITIES

IPOs are opening the floodgates of opportunity for Indian investors, but only the patient will truly profit

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Initial public offerings (IPOs) have become the buzzword for Indian capital market investors.

In October, we saw blockbuster names such as Tata Capital and LG Electronics India getting listed. After raising around US $12 billion so far, the Indian primary market is expected to garner about US $20 billion over the next 12 months through stock issuances via the IPO route.

At an exchange rate of ₹88 per US dollar, this translates to a capital raise of ₹1.76 lakh crore. The number appears mind-boggling, and some fear that it may drain substantial liquidity from the financial markets. However, this phenomenon will expand the listed universe and offer many investment opportunities to investors.

IPOs have always been one of the important factors attracting retail investors to the capital markets in India. Large IPOs such as those of Coal India, Maruti Suzuki India, National Thermal Power Corporation, Tata Consultancy Services, and Life Insurance Corporation of India over the past three decades have encouraged many investors to enter the equity markets.

After the Covid-19 pandemic, a huge number of retail investors entered equity markets in search of growth opportunities. Actively embracing the digital ecosystem of financial markets has facilitated smooth onboarding for many Gen-Z investors. Aadhar-based KYC has enabled quick opening and activation for investors. Reforms in the primary markets have further simplified participation for these tech-savvy young investors.

Over time, the financial markets regulator has ensured shorter IPO timelines, greater disclosures at the time of issue, and increased transparency in the allotment process. The convenience of mobile-based IPO applications from the comfort of one's home has further boosted retail participation.