India’s IPO Market: A Beacon of Resilience Amid Global Challenges in 2024
Despite the backdrop of economic uncertainties and geopolitical tensions in 2024, the Initial Public Offering (IPO) market has shown remarkable resilience, with India emerging as a dominant player on the global stage. This article delves into the dynamics of India’s IPO market, comparing it with global trends in terms of volume, value, returns, and sectoral contributions.
IPO Volume: India Takes the Lead
In 2024, India distinguished itself as a global leader in IPO activity by volume, launching an impressive 327 IPOs as of December 9, 2024. This achievement not only placed India ahead of the United States, which recorded 183 IPOs, but also significantly outpaced Europe, which saw 115 IPOs. India accounted for over 25% of all IPOs globally, a testament to its dynamic market and robust economic growth.
IPO Data by Country in 2024
| Country | IPO Number | % of Total | IPO Value ($ Billion) | % of Total |
|---|---|---|---|---|
| India | 327 | 26.9 | 19.9 | 16.4 |
| United States | 183 | 15.1 | 32.8 | 27.1 |
| Europe excl. UK | 115 | 9.5 | 15.0 | 12.4 |
| China | 98 | 8.1 | 7.3 | 6.0 |
| Japan | 84 | 6.9 | 5.1 | 4.2 |
| South Korea | 75 | 6.2 | 2.4 | 2.0 |
| Hong Kong | 64 | 5.3 | 8.8 | 7.3 |
| Malaysia | 49 | 4.0 | 1.4 | 1.2 |
| Saudi Arabia | 42 | 3.5 | 3.5 | 2.9 |
| United Kingdom | 10 | 0.8 | 0.7 | 0.6 |
| Others | 168 | 13.8 | 12.1 | 10.0 |
| Total | 1,215 | 100.0 | 121.2 | 100.0 |
Source: EY. Data as of December 9, 2024.
While global IPO activity saw a decline of 10% to 1,215, India’s performance stood out as a beacon of growth. The total proceeds from Indian IPOs reached approximately $19.9 billion, contributing significantly to the global total of $121.2 billion. Although the United States reclaimed the top spot with $32.8 billion in proceeds, India’s robust fundraising highlighted its expanding investor base and increasing market maturity.
IPO Proceeds: India’s Steady Contribution
India’s fundraising activity through public markets reached an all-time high in 2024, reflecting a strong appetite for equity investments. The following table illustrates the mobilization of funds through various public offerings over the years:
Fund Mobilization Through Public Markets (in ₹ Billions)
| Year | IPOs | FPOs | OFS | QIPs | Total Equity Raise |
|---|---|---|---|---|---|
| CY14 | 155 | 47 | 32 | 138 | 388 |
| CY15 | 139 | 0 | 35 | 189 | 683 |
| CY16 | 270 | 0 | 12 | 48 | 443 |
| CY17 | 760 | 0 | 19 | 87 | 1,540 |
| CY18 | 335 | 0 | 13 | 56 | 632 |
| CY19 | 178 | 0 | 26 | 35 | 794 |
| CY20 | 313 | 0 | 15 | 80 | 1,483 |
| CY21 | 1,314 | 0 | 24 | 42 | 1,974 |
| CY22 | 613 | 43 | 11 | 78 | 886 |
| CY23 | 576 | 18 | 9 | 23 | 1,289 |
| CY24 YTD | 1,575 | 182 | 30 | 41 | 3,353 |
Source: NSE, Bloomberg. Data as of December 9, 2024.
IPO Returns: A Rewarding Year for Indian Investors
The Indian IPO market delivered an impressive average return of 37.1% in 2024, significantly outperforming many emerging markets, including Europe, which saw average returns of 20.6%. This performance starkly contrasts with the BSE Sensex, which posted a modest gain of 7.3% during the same period.
Globally, IPO returns varied widely, with markets like Hong Kong and South Korea struggling due to local economic challenges. In contrast, China experienced strong IPO activity, buoyed by various economic and capital market measures.
Sectoral Insights: India’s Broad-Based Rally
India’s IPO landscape in 2024 was characterized by a diverse range of sectors, with notable activity in automobiles, technology, industrials, and consumer goods. The rise in IPOs from the steel and infrastructure sectors was particularly driven by domestic demand and supportive policy incentives.
Sectoral Contribution in IPO Value (in %)
| Sector | CY20 | CY21 | CY22 | CY23 | CY24 YTD |
|---|---|---|---|---|---|
| Automobiles | 0.0 | 6.4 | 1.3 | 4.1 | 20.2 |
| Telecom | 0.0 | 1.1 | 0.1 | 0.1 | 12.8 |
| Retail | 1.7 | 5.3 | 7.1 | 5.1 | 9.4 |
| Capital Goods | 1.0 | 1.5 | 2.2 | 8.9 | 8.5 |
| E-Commerce | 0.0 | 27.9 | 0.1 | 1.6 | 8.2 |
| NBFCs | 33.1 | 9.1 | 7.7 | 11.2 | 6.3 |
| Healthcare | 14.0 | 6.7 | 6.0 | 16.3 | 5.9 |
| Infrastructure | 0.2 | 0.8 | 0.1 | 1.2 | 5.8 |
| Utilities | 0.0 | 0.9 | 0.0 | 0.0 | 5.7 |
| Insurance | 0.0 | 4.9 | 31.3 | 0.0 | 3.4 |
| Consumer | 1.2 | 1.3 | 2.9 | 1.2 | 1.6 |
| Others | 0.7 | 3.6 | 5.7 | 16.0 | 4.8 |
Source: NSE, Bloomberg. Data as of December 9, 2024.
Investor Insight: Beware of the Boom-Bust Cycle
While the current IPO boom presents lucrative opportunities, history warns of the potential for market corrections following aggressive fundraising periods. Past trends indicate that such surges often precede significant downturns, as seen after FY08, FY11, and FY18.
Key Considerations for Investors:
-
End of Market Cycles: High IPO activity often coincides with late-cycle phenomena, where investor optimism leads to inflated valuations and a rush to capitalize on perceived opportunities. This can set the stage for corrections when fundamentals do not support such valuations.
- Quality Concerns: A surge in Offers for Sale (OFS) may indicate that promoters are cashing out rather than reinvesting in their companies, raising red flags for potential investors.
Investors are advised to remain vigilant, as high fundraising years can obscure underlying risks that may lead to significant market corrections.
Disclaimer: This article is for informational purposes only and should not be considered investment advice. Investors should consult with experts before making any investment decisions.