IPO Mania on D-Street to continue in October-November; Hyundai, Swiggy look to raise Rs 60,000 crore

As we approach the festive season, India's primary market is set to remain abuzz with action, with a slew of IPOs coming the investor's way. More than 12 companies will debut on the bourses in the next 2 months, looking to raise around Rs 60,000 crore in total. Prominent names among them include food delivery giant Swiggy, automobile giant Hyundai and more.

Apart from these companies, NTPC Green Energy, Afcons Infrastructure, Waaree Energies, Niva Bupa Health Insurance, One Mobikwik Systems, and Garuda Construction will also be bringing about their IPOs in the months to come.

As per reports, the Indian markets can expect around 30 IPOs before the end of 2024. The biggest of the lot will be of Hyundai Motor India Ltd, the Indian subsidiary of South Korea's Hyundai Motor Company, which is expected to raise Rs 25,000 crore, making it the largest-ever IPO in India to date. This record was previously held by LIC (Life Insurance Corporation of India), which had raised about Rs 21,000 crore via its IPO in 2022.

However, the automobile giant's issue will entirely be an OFS (Offer for Sale) of about 14,21,94,700 shares by Hyundai Motor Company, and will not have any fresh issue involved. Food and grocery delivery giant Swiggy is targeting to raise Rs 10,414 crore via a combination of fresh issue and OFS. The Rs 10,000-crore IPO of NTPC Green Energy is also set to come in the first week of November.

Following them on heels will be the IPOs of construction firm Afcons Infrastructure, which will look to raise Rs 7,000 crore. Waaree Energies is expected to raise Rs 3,000 crores via its IPO. Additionally, Niva Bupa Health Insurance and One Mobikwik Systems are also planning to raise Rs 3,000 crore and Rs 700 crore, respectively.

Positioning oneself in this IPO Euphoria

So far in 2024, 62 companies have already raised Rs 64,000 crore collectively via mainboard, marking a 29% increase from Rs 49,436 crore, which were mopped up by 57 firms through the IPO route in 2023. More than 50 companies have already filed their draft papers, and are now awaiting market regulator SEBI's approval.

IPO prospects for 2025 aren't looking dull either, with SEBI already approving 22 IPOs, which will collectively look to raise Rs 25,000 crore. Amidst this IPO frenzy, how can you position yourself in the best possible manner? Should you subscribe to an IPO for the long-term, or should you sell post earning listing gains?

Per a recent SEBI study, which studied investor behavior over 144 IPOs listed on bourses between April 2021 and December 2023, if an IPOs listing returns exceeded 20%, investors are likely to sell around 67.6% of shares by value within just a week. On the contrary, if the returns were negative, only 23.3% of shares by value were sold off.

Sarvjeet Singh Virk, Co-founder & MD, Shoonya by Finvasia observes that most retail investors are mainly attracted to the listing gains of the IPO, while ignoring the fundamentals of the companies floating the IPOs.

"Mindlessly investing without evaluating the valuations and fundamentals of any business can be highly risky. Also, investing solely on the basis of gray market premiums is yet again, undesirable. Recently, NSE has capped the pre-opening price surge to 90% to discourage investors who are investing only for listing gains. However, this is applicable only for SME IPOs, and not mainboard ones", he continues.

Reading the company's DRHP or RHP can be a good starting point to understand why the company wishes to raise funds in the first place. It can also help you understand its long-term objectives. Another good parameter is to check how its peers are performing in the markets, as compared to it. Also evaluate if the company have a steady track record of profitability and revenue growth.

Check for the shareholding pattern of the company, pre and post IPO. Is there a fresh issue, or is the IPO entirely OFS (offer for sale), where promotors are offloading their stake in the company? While most IPOs are a mix of the two, heavy selloff of promoter stakes should be construed as a red sign.