The Slowdown of India’s IPO Market: A Comprehensive Overview

India’s initial public offering (IPO) market experienced a remarkable surge in 2024, setting records that captured the attention of investors and analysts alike. However, as the year progressed, the landscape shifted dramatically, leading to a significant slowdown in IPO activities. According to data from Prime Database, a staggering 144 companies, with IPO plans totaling Rs. 1.47 lakh crore, have put their listings on hold. Among these, 67 firms are currently awaiting approval from the Securities and Exchange Board of India (SEBI).

The Slowdown in IPOs

The initial months of 2024 saw a stark decline in IPO activity. In January and February, companies managed to raise only Rs. 16,000 crore through 10 mainboard IPOs, marking a steep 37% drop compared to December 2024. By March, the IPO market came to a complete standstill, with not a single mainboard IPO launched. This freeze underscores the extent of the slowdown in the primary market, raising concerns among stakeholders.

Major Reasons Behind the IPO Slowdown

Several factors have contributed to this downturn in the IPO market:

Market Volatility

The persistent fluctuations in the stock market have created an atmosphere of uncertainty. Companies are increasingly hesitant to proceed with public offerings when market conditions are unstable, leading to delays in their IPO plans.

Investor Caution

Potential investors are adopting a more cautious approach, resulting in reduced demand for new listings. This shift in sentiment is a critical factor that companies must navigate as they consider going public.

Regulatory Scrutiny

Stricter regulations from SEBI have made the approval process more challenging. Companies are facing longer wait times for approvals, which has further contributed to the backlog of IPOs waiting to launch.

Upcoming Mainboard IPOs

Despite the slowdown, several companies are still poised to launch their IPOs, albeit with revised expectations. Here’s a look at some of the notable firms planning to enter the market:

Tata Capital

Tata Capital, the financial services arm of the Tata Group, has filed a Draft Red Herring Prospectus (DRHP) with SEBI for an IPO worth Rs. 16,000 crore. This offering will include a combination of fresh issuance of 2.3 crore equity shares and an offer for sale (OFS) with a face value of Rs. 10 each.

JSW Cement

JSW Cement, a leading manufacturer of green cement, has received final approval from SEBI to launch its IPO, aiming to raise Rs. 4,000 crore. The IPO will consist of a fresh issue of Rs. 2,000 crore and an OFS of Rs. 2,000 crore by existing shareholders, with plans to launch in July.

Zepto

Bengaluru-based quick-commerce startup Zepto is preparing to file its DRHP, targeting an IPO raise between Rs. 6,400 crore and Rs. 8,000 crore. Despite market volatility raising concerns about its valuation, Zepto is expected to go public in the third quarter of this year.

Ather Energy

Ather Energy, an electric vehicle manufacturer, initially planned a Rs. 4,000 crore IPO, which has now been reduced to around Rs. 3,000 crore. The company’s valuation has also dropped from Rs. 20,000 crore to Rs. 12,800 crore. Ather has submitted updates to its DRHP, pushing the IPO launch to the end of this month.

Urban Company

Urban Company, a technology platform for at-home services, has revised its IPO target significantly. Initially aiming for a valuation of Rs. 16,000-24,000 crore and a raise of Rs. 3,000 crore, the company now plans to raise about Rs. 500 crore. However, the IPO timeline remains on track.

LG Electronics India

LG Electronics India, a subsidiary of the South Korean giant, had planned a massive Rs. 15,000 crore offer-for-sale, expected to be one of the largest consumer IPOs in India. However, this plan is currently on hold due to global economic uncertainties and shifting investor sentiment.

Conclusion

The IPO market in India, once a beacon of growth and opportunity, is currently navigating a challenging landscape marked by volatility and caution. While several companies are still preparing to launch their IPOs, the overall sentiment remains cautious as stakeholders await more favorable market conditions. As the situation evolves, it will be crucial for companies and investors alike to adapt to the changing dynamics of the IPO market.

Investors should remain vigilant and consult with financial advisors before making any investment decisions, as the risks associated with equities can lead to significant financial losses.