Surge in IPO Activity Boosts Indian Primary Markets in August
August saw a remarkable resurgence in the Indian primary markets, with initial public offering (IPO) activity reaching its highest level in over two years. During the month, 10 companies collectively raised Rs 17,047 crore, marking the largest monthly fundraising since May 2022, according to a Moneycontrol report.
Out of the total amount raised, approximately 57% or Rs 9,715 crore came from new issue capital, while Rs 7,333 crore was from offer for sale (OFS) components.
In 2024, there have been 56 IPOs raising a total of Rs 65,000 crore, a significant increase compared to the 20 IPOs that raised just over Rs 15,051 crore in the same period last year. August alone saw 25 companies file draft red herring prospectuses (DRHPs) with the Securities and Exchange Board of India (SEBI). For the year, 92 firms have filed DRHPs, the highest number since 2021 when 120 companies did so.
Reasons Behind the Surge in IPO Activity
The rise in IPO activity can be attributed to robust economic growth, a buoyant stock market, and strong corporate earnings, which have encouraged more companies to go public. IPO activity was slow in the first quarter of the financial year (Q1FY25) due to the general elections, but it has accelerated since then. This uptick is supported by favorable political developments, policy continuity, pro-growth government initiatives, and expectations of an interest rate cut by the US Federal Reserve, benefiting global markets including India.
Notable IPOs in August
Leading the IPOs in August was Ola Electric Mobility, which raised approximately Rs 6,145 crore. This was followed by Brainbees Solutions with Rs 4,193 crore and Premier Energies with Rs 2,830 crore. Other significant IPOs included Ceigall India (Rs 1,253 crore), Bazaar Style Retail (Rs 835 crore), ECOS India Mobility & Hospitality (Rs 600 crore), and Interarch Building Products (Rs 600 crore).
Investor Interest in IPOs
Investor enthusiasm for IPOs remains high, with many offerings oversubscribed on their debut. This is driven by elevated valuations in the secondary market and attractive listing-day returns from recent IPOs. Several IPOs are trading at a grey market premium of 20% to 100% above their price bands.
Among the most oversubscribed IPOs in August, Unicommerce eSolutions led with a subscription rate of 168.35 times, followed by Orient Technologies at 155 times, and Saraswati Saree Depot at 108 times. Other notable IPOs with high subscription levels include Premier Energies (75 times), ECOS India Mobility & Hospitality (65 times), and Akums Drugs and Pharmaceuticals (63 times).
