IPO gold rush: All but 4 IPOs in FY24 gave positive returns on listing

• The IPO season of H1 FY24 did not have mega issues but investors were rewarded better.
• Retail applications were at ₹55,516 crore, which is 118% higher than total IPO mobilisation.
• The next 4-5 months might see several IPOs before hitting an Election pause, say experts.

The IPO market has been buzzing this fiscal year with at least two to three public offers opening every day. There were fewer mega IPOs compared to last year, as more companies raised smaller tranches of money; but also rewarded investors better.

With the exception of four companies, every other IPO listed in this financial year gave positive listing gains. Besides, only seven of the 29 IPOs as listed below have given single digit listing gains. The rest all gave double digit listing gains.

In fact a few stocks like Ideaforge, Aeroflex Industries and Netweb Technologies almost doubled investor money on listing day. As many as 27 of 28 IPOs (excluding Updater) are trading above the issue price, says Primedatabase.

In terms of listing gains, the first half of FY24 is much better than last year. The average listing gain increased to 29.44% this season, in comparison to 11.56% in the first half of FY23, says Primedatabase.

There, however, have been a few recent exceptions like Updater Services, Yatra Online, Zaggle Prepaid Services and Avalon Technologies.

Source: Axis Capital

The retail gold rush

The mad rush of most IPOs were seen in August and September which saw 21 IPOs. In spite of that, there was little fatigue seen. According to Pranav Haldea, managing director, Prime Database Group, IPO response was further buoyed by strong listing performance.

As many as nine IPOs launched recently were subscribed by over 50 times. Ten of them were subscribed over 10 times.

The response of retail investors increased tremendously in comparison to the first half of 2022-23. The average number of applications from retail increased to 10.02 lakh, in comparison to 7.57 lakh in 2022-23.

“Capital markets have performed well since January. As a result, many of the IPOs are getting overwhelming subscription levels. Aeroflex Industries IPO and Vishnu Prakash R Punglia IPO garnered more than 27 lakh and 20 lakh subscriptions respectively. This showcases the depth of the Indian capital market and increasing participation of domestic investors in IPOs,” Mahavir Lunawat, managing director of Pantomath Capital Advisors told Business Insider India.

The amount of shares applied for by retail by value was at ₹55,516 crore. That’s 118% higher than the total IPO mobilisation. In 2022-23, it was 33% lower in 2022-23.

Some of SEBI reforms also helped, like listing time that was reduced from T+6 days to T+3 days. It will also help expedite retail investments further and help the sector become more efficient than ever, Lunawat added.

The IPO season will go on

This IPO season, as many as 31 Indian corporates raised ₹26,300 crore through main board IPOs in the first half of 2023-24, according to Primedatabase.

On the outset it looks 26% lower than the ₹35,456 crore mobilized by 14 IPOs last year. But if the mega IPO of LIC is excluded, IPO mobilisation grew by a massive 76% from last year.

There is more to come this financial year as well. “Notwithstanding the present volatility in the secondary market, the next 4-5 months are likely to see several IPOs being launched before a pause on account of the general elections,” says Haldea.

There is a lot more in the pipeline. As many as 28 companies are proposing to raise ₹38,000 crore with SEBI approvals at hand. Another 41 more are looking to raise about ₹44,000 crore are awaiting the regulator’s approval.

Lunawat believes that the current outlook looks promising with a strong IPO pipeline of companies who have strong fundamentals. Moreso, many growth stage companies are hitting the capital market at an exponential pace, especially from Tier II and Tier III regions.

“For the Indian economy to grow significantly, small and midsize businesses need to be re-evaluated from an investment aspect, because they will help in reshaping the capital market dynamics further,” he added.

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