IndiGo's Rs 3,018-crore public offer was six times oversubscribed as foreign investors scrambled to buy into India's biggest airline, lured by its strong profitability in one of the world's fastest-growing aviation markets.
Demand was particularly strong among foreign institutional investors, who placed orders that were 15 times more than the number slotted for all institutional investors by InterGlobe Aviation Ltd, IndiGo's parent company.
IndiGo was selling the shares at between Rs 700 and Rs 765 rupees, raising up to Rs 3,020 crore ($462 million).
The strong demand was expected to see the company pricing the offering at the top end of the range, valuing the carrier at around $4 billion, more than rivals such as SpiceJet Ltd or Jet Airways Ltd.
Its IPO comes at a time when slumping fuel costs have raised the outlook for budget airlines in India.
At the same time, IndiGo is expected to benefit the most as more Indians become wealthy enough to fly. The carrier has outperformed rivals by keeping its cost base and debts low, while building a reputation for punctuality.
"The depth of the aviation market (in India) is huge. They marketed the IPO very well and IndiGo is the top player so this (the demand) isn't a surprise," said Praveen Sahay, a Mumbai-based airlines analyst at Batlivala & Karani Securities.
Lower fuel prices have boosted shares in the sector, with budget rival SpiceJet up nearly 50 per cent this month, while Jet Airways is up by a quarter.
GoAir, another Indian low-cost carrier, is also considering a stock listing, sources told Reuters on Wednesday.
Air travel penetration in India is still tiny at just 0.04 annual trips per capita, a fraction of the 0.3 trips taken in China. Passenger numbers, though, are up 20 per cent this year as more Indians become wealthy enough to fly.
The listing is set to be the largest in India since Bharti Infratel's $751 million listing in December 2012, and comes two weeks after the biggest domestic coffee chain operator, Coffee Day Enterprises, raised $177 million in an IPO.
($1 = Rs 65.3700)