Review 2024: A Booming Year for Indian IPOs

The Indian Initial Public Offering (IPO) market has witnessed a remarkable resurgence in 2024, with a staggering 70% of the mainboard IPOs currently trading above their issue prices. This impressive statistic underscores a year of significant growth and investor enthusiasm, driven by a combination of strong market fundamentals and a diverse array of new listings.

Leading the Charge: Jyoti CNC Automation

At the forefront of this IPO success story is Jyoti CNC Automation, which has emerged as a standout performer with substantial gains since its listing. Following closely are KRN Heat Exchanger and Refrigeration, Premier Energies, Bharti Hexacom, and Platinum Industries, all of which have seen their stock prices soar between 150% and 300%. This surge in performance reflects not only the companies’ strong fundamentals but also a broader trend of investor optimism in the Indian equity market.

As of now, 84 companies have made their debut on the mainboard in 2024, with expectations for nine additional listings before the year concludes. This would bring the total to 93 companies, marking a significant uptick in market activity.

A Record Year for Equity Issuances

According to a recent report by Motilal Oswal Financial Services, the Indian IPO market has experienced an outstanding year, with equity issuances across various categories rising approximately 2.6 times compared to the previous year. This growth can be attributed to the evolving characteristics of Indian equities, which are introducing new dynamics to the investment landscape, coupled with robust capital inflows.

The contribution of new listings to the Indian market capitalization has also seen an increase, rising to 2.9% compared to 1.4% in 2023. However, it still falls short of the highs recorded in 2017 (3.7%) and 2021 (3.4%), indicating room for further growth.

Notable Performers and Laggards

Several stocks have made headlines with impressive gains, including Enviro Infra Engineers, One MobiKwik Systems, Orient Technologies, Gala Precision Engineering, EPack Durables, Interarch Building Products, and Diffusion Engineers, all of which have seen increases of 100-150% from their IPO prices. On the other hand, a few stocks have struggled, with Popular Vehicles and Services, Capital Small Finance Bank, Western Carriers (India), Vodafone Idea, and Akme Fintrade (India) trading 30% to 45% below their IPO prices.

Emerging Trends in the IPO Landscape

Arun Kejriwal, head of Kejriwal Research and Investment Services, has identified three key themes that have emerged in 2024.

1. New Business Models: The year has seen a surge in IPOs from previously unlisted companies, particularly those that have effectively communicated their business models to potential investors. Companies that have failed to provide clarity in their offerings have often seen lukewarm responses.

2. Sectoral Trends: There has been a noticeable trend where the success of one company in a sector prompts others to follow suit. The hospitality sector, which had seen little activity in recent years, has recently experienced a wave of IPOs, including those from The Park, Juniper Hotels, SAMHI Hotels, and Ventive Hospitality.

3. Revival of Textiles: The textiles sector, long overlooked, is witnessing a resurgence with new entrants like Sanathan Textiles making their mark. This sector, which boasts over 100 listed companies, has not seen a new player in a decade, making this development particularly noteworthy.

Looking Ahead: What to Expect in 2025

As we look towards 2025, Mohit Gulati, CIO and managing partner of ITI Growth Opportunities Fund, anticipates that the momentum in the mainboard IPO market will continue. He highlights the potential for significant value unlocking from demerged entities that will seek to raise capital separately.

Arun Kejriwal also notes that the upcoming year is likely to see an increase in the number of companies looking to raise capital, resulting in a diverse mix of offerings. This includes fresh issues, offers for sale, private equity deals, and gradual stake sales by promoters. The overarching theme remains clear: the market will continue to be a source of steady capital raising.

Conclusion

The Indian IPO market in 2024 has been nothing short of spectacular, with a significant portion of new listings trading above their issue prices and a diverse array of sectors gaining traction. As we move into 2025, the outlook remains positive, with expectations of continued growth and innovation in the IPO landscape. Investors are advised to stay informed and consider the evolving dynamics of the market as they make their investment decisions.