India’s IPO Market Faces Significant Slowdown
India’s initial public offering (IPO) market is currently experiencing a notable slowdown, with at least two major IPOs, valued at a combined $759 million, expected to be delayed. This trend has raised concerns among investment bankers and market analysts, who attribute the slowdown to weak investor sentiment and broader geopolitical uncertainties.
Companies Postponing Listings
Among the companies postponing their IPOs are Avanse Financial Services, an education loan provider, and Anthem Biosciences, a contract drug manufacturer. Both firms have decided to delay their listings, reflecting a growing trend among Indian companies to reassess their capital-raising strategies in light of current market conditions. Other notable firms, including JSW Cement and the Indian unit of South Korean conglomerate LG Electronics, have also put their IPO plans on hold.
Suraj Krishnaswamy, managing director of investment banking at Axis Capital, pointed out that only a select group of institutional investors are currently participating in the market, primarily due to global uncertainties. He emphasized that ongoing tensions between India and Pakistan have further complicated the investment landscape.
Broader Economic Implications
The delays in IPOs are symptomatic of a larger trend where global trade wars and geopolitical tensions are clouding the economic outlook. Companies are increasingly cautious, leading them to reassess their capital-raising and investment plans. The current environment has prompted many firms to reconsider their IPO timelines, with some even contemplating restarting the entire process or seeking extensions from India’s market regulator.
Ather Energy’s IPO: A Barometer for Investor Sentiment
The highly anticipated IPO of Ather Energy, an electric scooter manufacturer, was expected to serve as a barometer for investor appetite in the market. However, the company’s stock fell by approximately 5% in early trading, reversing initial gains after listing at a modest 2% premium to its issue price of ₹321. Vinit Bolinjkar, head of research at Ventura Securities, remarked that the muted performance of such a high-profile electric vehicle (EV) company underscores the broader weakness in India’s primary market.
The Scale of Delays
In total, 58 companies with regulatory approval have delayed their IPOs due to global market disruptions. This includes Avanse Financial Services, which received approval for its $356 million IPO in October 2024, and Anthem Biosciences, cleared to raise $403 million in April 2023. Neither company has responded to inquiries regarding their decision to postpone.
Pranav Haldea, managing director of PRIME Database Group, noted that the regulatory clearances for several companies are set to expire in the coming months. This situation may force some firms to restart their IPO processes or seek extensions, further complicating the landscape.
India: The Second-Largest IPO Market
Despite the current slowdown, India was the world’s second-largest IPO market last year. However, data from PRIME Database indicates a staggering 58% decline in IPOs listed on the main stock exchanges this year. Additionally, total fundraising across all listing platforms has dropped by 18%, according to LSEG data.
While the market is facing challenges, there remains a cautious optimism among some investment bankers. An anonymous banker noted that while things are moving slowly, it is not a complete standstill. Many IPOs are in a similar predicament, reflecting a broader trend of hesitance among companies.
Retail Investors Exercise Caution
Retail investors, having faced significant losses due to market volatility, are also becoming more cautious with new investments. This shift in sentiment has led to a lukewarm reception for this year’s IPOs. Ather Energy, for instance, had to cut its target valuation by 44% and reduce the offer size to attract investors despite the uncertain environment.
Astha Jain, a senior research analyst at Hem Securities, warned that Ather Energy could be a risky bet given the current geopolitical issues and high valuation. The Nifty 50 index has seen a 4.8% increase since April 2, following U.S. President Donald Trump’s announcement of “reciprocal” tariffs, but it remains 7% down from record highs observed in late September.
Conclusion
The current slowdown in India’s IPO market highlights the complexities of navigating an uncertain global landscape. As companies reassess their strategies and investors exercise caution, the future of IPOs in India remains uncertain. The ongoing geopolitical tensions and market volatility will likely continue to shape the decisions of both companies and investors in the months to come.