IPOs roar back in 2024: Newly-listed firms storm the BT500 with record ₹1.3 lakh crore haul

After a relatively muted 2023, the primary market has seen a turnaround in 2024, hitting new records in terms of fundraising. Data available till November 30 shows that Rs 1.34 lakh crore has been raised in 2024 through initial public offerings (IPOs), beating the previous record of Rs 1.18 lakh crore raised in the whole of 2021. It is a year that has seen the return of big issues. In October, Hyundai Motor India raised Rs 27,870 crore in its IPO, which is the biggest ever in the country. That was followed in November by Swiggy, which raised `11,327.43 crore from its IPO. Indeed, that IPO raised almost as much as the `12,362 crore raised in the whole of 2019, a year before the Covid pandemic. Thanks to the stellar showing this year, India’s primary market is now the largest globally by volume and second largest by value, making new listings particularly noteworthy as per the DSP MF Netra report of November 2024. This good showing is also reflected in the BT500 list this year. There has been an increase in newly-listed firms that have made the cut: from 10 in last year’s list to 16 this time around, though this was slightly lower than the 19 new entrants in the BT500 list two years ago. There are many factors that have aided this IPO boom. Primary among them is the fact that India is the world’s fifth-largest economy, it is growing at a healthy rate with rich valuations and with inflation in check, and this has boosted Indian investors’ confidence. During Citibank’s media roundtable in October 2024, Rahul Saraf, Head of Investment Banking, Citi India, said investors have been enthused by the consistent returns of more than 12% that they’ve seen since 2019, barring 2022, when tech stocks saw a decline. This may be tempered now with the correction in the market. Other contributing factors include India’s inclusion in the global bond indices. “Overall, in the last year, the primary market has performed very well with more than 70 companies listed, out of which 45 listed at a premium of 48% average (12% to 175%), while the remaining 25 companies had a poor listing in the range of 10-20% on listing day,” says Vikas Jain, Head of Research at Reliance Securities. However, there have been some signs of challenges since then. The market turned bearish in November as it went into a technical correction—a situation when the benchmark indices decline by 10% each. Besides, there were some concerning trends even in the two big IPOs of Hyundai and Swiggy. In both cases, there was no major retail investor enthusiasm. For instance, though the Hyundai IPO saw 3.59 times (x) subscription, that was largely down to last-minute interest from qualified institutional buyers (QIBs), whose quota was subscribed 6.02x. The retail investor portion was subscribed just 1.14x. Good Debut Overall, the 16 newly-listed firms that have broken into the BT500 list raised `31,756 crore from their IPOs, compared to `89,002 crore raised through 86 IPOs overall in the BT500 study period. Among the new entrants in the BT500 list, Sunil Mittal-backed Bharti Hexacom leads the pack with a market cap of `55,113 crore—it is ranked 150th overall. From its listing on April 12, 2024, to the end of October, Bharti Hexacom, which has an extensive mobile telephony network across rural and urban areas in Rajasthan and the Northeast region, delivered 84% returns to its investors. Its revenues have grown at a compound annual growth rate (CAGR) of 14% over the past five years and profit after tax at 22%. The company reported a profit of Rs 253 crore in Q2FY25, as against a loss of Rs 184 crore in the corresponding quarter the previous year. Its revenue grew 21% year-on-year (YoY) in Q2 to Rs 2,098 crore. The company aims to expand its network further in these regions, says Samir Bahl, CEO, Investment Banking at Anand Rathi Advisors. Bahl is also positive on JSW Infrastructure, which ranks second among the newly-listed firms in the BT500 list and 156th overall. He says it has a strong capex road map, combined with a healthy order book. Similarly, he is positive on the Indian Renewable Energy Development Agency (Ireda), the third among the newly-listed firms and ranked 171 overall, since it has strong government backing and a promising project pipeline. Analysts say JSW Infrastructure has delivered 54% returns over the past year, driven by a robust five-year CAGR of 28% in terms of revenue and 35% for PAT. In Q2FY25, its revenue rose 18% YoY to Rs 1,001 crore, while PAT jumped 46% to Rs 372 crore. The company has outlined ambitious expansion plans, including two brownfield projects with an estimated capex of Rs 3,259 crore and two greenfield projects requiring around Rs 7,119 crore. Ireda, which has seen revenue and PAT grow at a five-year CAGR of 20% and 34%, respectively, has delivered returns of about 300% from its listing on November 29, 2023. In Q2FY25, the company’s revenue grew 38% year-on-year, to Rs 1,629 crore, while its PAT grew 36% to Rs 388 crore. Jain of Reliance Securities says, “We have seen 12 companies gain more than 100% from their IPO price and 20 companies with an average gain of 60%. We believe there are a few companies that enjoy some moat in their business; valuations will continue to move higher with expansions leading to growth in revenues, a strong management pedigree, and enjoying the scarcity premium.” Among the other newly-listed firms, names like Juniper Hotels are expected to do well, given the rise in foreign tourist arrivals and 30% higher wedding days, says Sneha Poddar, VP, Research, Wealth Management at Motilal Oswal Financial Services. Also, healthcare companies, which are witnessing a rise in order flows, especially for contract development and manufacturing organisations (CDMOs), given the need to diversify from Chinese suppliers. Additionally, recent rate cuts will likely boost funding for clinical development projects and housing finance companies, strengthening their outlook, says Poddar. Strong Pipeline According to a survey of economists by Bloomberg, India stands out as the only major economy with zero probability of slipping into recession, given the current economic landscape. This high growth potential of the Indian economy is generating ample opportunities across all sectors, enabling both small and midsized companies to expand rapidly, says Bahl of Anand Rathi Advisors. Narinder Wadhwa, Managing Director of broking firm SKI Capital, says, “The primary market is projected to stay robust, fuelled by sectors such as technology, renewable energy, and financial services. With a strong focus on ESG (environmental, social, and governance) initiatives, companies that align with India’s digital transformation and sustainability goals are expected to attract investor interest.” Though global economic factors could pose challenges, he says, India’s primary market remains a preferred destination for both domestic and international investors. “Sectors like IT services, consumer goods, and EV manufacturing continue to attract investment, bolstering India’s market reputation as a global growth hub,” Wadhwa adds. The past five years have seen a remarkable transformation in the primary market, with wider participation across multiple sectors and from smaller companies. The number of new-age and e-commerce platforms listed on the bourses has grown to 29 in calendar year 2024 from just five in 2014, signifying a healthy business environment for start-ups in India. The start-up ecosystem should provide a steady supply of companies looking to go public, thereby helping India’s investible universe to expand. In addition, liquidity in the Indian market has increased materially over the last three-four years, which has provided big support to the primary market, especially the large issues, says Poddar of Motilal Oswal Financial Services. Going ahead, there is a strong pipeline of 31 companies that have received approval from markets regulator, the Securities and Exchange Board of India (Sebi). They are estimated to raise a total of `45,000 crore in the coming year. The biggest among them is NTPC Green Energy, which is expected to raise `10,000 crore from its public offer, as per PRIME Database. Besides, there are another 56 companies that are waiting for Sebi’s approval. These are estimated to raise around `90,000 crore in total from their IPOs. How many of these firms eventually end up hitting the market will depend on how quickly the stock market is able to shake off its November jitters. @Riddhima76

IPOs roar back in 2024: Newly-listed firms storm the BT500 with record ₹1.3 lakh crore haul

IPOs have come back with a bang in 2024, with a record Rs 1.3 lakh crore raised till October. As a result, many newly-listed firms have made it to the BT500 list