India's IPO market is experiencing a period of high activity, solidifying its position as one of the most dynamic globally. Several factors contribute to this surge, including a deepening domestic capital base, a favorable valuation environment, macroeconomic strength, and regulatory reforms.
In 2024, India saw a significant surge in IPO activity, emerging as a global leader in public offerings. A total of 338 IPO deals were recorded, marking a 44% increase compared to 2023. These IPOs raised approximately $20.99 billion, a near threefold increase from the $7.9 billion raised in the previous year. This volume matched the combined total of China and Hong Kong. Roughly two-thirds of the funding for these IPOs originated from domestic sources, which is a considerable increase from the quarter seen three years prior. Systematic investment plans (SIPs) have driven record inflows of approximately $2.7 billion per month, strengthening mutual funds as key institutional investors and reducing reliance on foreign capital.
The Indian IPO market has remained resilient in FY25, despite global economic volatility and shifting investor sentiment. 80 mainboard IPOs were witnessed, marginally higher compared to 76 in FY24, with total capital raised to the tune of INR 1,630 billion, a significant increase compared to INR 619 billion in the previous year. The automotive, consumer discretionary, and industrials sectors led in total funds raised. Smaller IPOs (issue size less than INR 2 billion) outperformed larger ones (greater than INR 50 billion) in listing-day gains, averaging 37% versus 29%.
Several factors have been identified as key drivers of this growth. India's strong economic growth, with projected annual growth of 6.2–6.5 percent over the next five years, has created a conducive environment for digital and consumption-led IPOs. This growth is supported by an expanding middle class and rising consumption, with increasing household savings favoring equity-linked products. Furthermore, recent reforms by the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI) have streamlined the IPO process and enhanced investor protection, contributing to the market's attractiveness. Effective September 2024, foreign companies can merge into their Indian subsidiaries via a fast-track route, potentially reducing merger timelines from 12–18 months to 3–4 months.
The positive momentum in the Indian IPO market is expected to continue. Kotak Mahindra Capital Co. anticipates that companies will raise over $30 billion in the next 12 months. Around 150 firms are planning to tap the equity market, reflecting a deepening confidence in India's capital markets. Upcoming IPOs include JSW Cement, NSDL, and Hero FinCorp. The IPO market is set for a packed week, with nine new IPOs opening for public subscription.
The robust activity and positive outlook underscore India's significance in the global IPO landscape, driven by strong domestic factors and increasing investor confidence.
