Initial public offering (IPO) momentum in India picked up in the last quarter compared to the world, with the domestic market witnessing the highest number of IPOs in three months-ended December 2022.
According to a trends report by consulting company EY, 18 Indian entities filed for IPO in the last quarter versus four in the preceding quarter (Q2FY23). Out of these, 11 IPOs were from the retail sector, followed by nine from the industrial products sector and finally eight coming from tech.
“IPO activity in the fourth quarter increased by 4x as compared to the previous quarter, demonstrating the growing prominence that our country is gaining as a global investment hub,” said Adarsh Ranka, Partner with an Indian member firm of EY Global.
Companies such as KFin Technologies, Kaynes Tech, Bikaji Foods went public during the quarter. The IPO of Global Health Ltd, which operates speciality hospital chain Medanta, had the largest issue size of $0.27 billion. It saw Anant Investments, an affiliate of private equity major Carlyle Group, among others offload stakes.
“While IPO issue proceeds by the companies are relatively small, the recent IPO activity is likely to welcome a brighter outlook for Indian capital markets this year,” Ranka added.
In what could be signs of a better IPO scenario this year, more than 10 companies have already filed their preliminary documents –draft red herring prospectus (DRHPs) - with market regulator Securities and Exchange Board of India (Sebi) in 2023 so far.
“We saw several IPOs concluding with good post-listing performance. Unlike earlier when capital markets significantly relied on foreign institutional investors, this robust growth pattern will continue because these companies are supported by domestic retail and institutional capital,” said Prashant Singhal, also a partner at EY.
Some companies that listed at strong premiums include Electronics Mart India, who at Rs 90 apiece, at a premium of more than 52% as compared to its IPO issue. Bikaji Foods International debuted at an 8% premium over IPO price on the NSE. Global Health listed at 19% premium over issue price. Shares of Kaynes Technology listed at Rs 778 apiece on the NSE, a premium of more than 32% as compared to its IPO issue price.
In comparison, KFin Tech listed at a flat price. Inox Green Energy Services made a weak market debut with the stock listing at Rs 60 apiece on the NSE, a discount of more than 7%. Fusion Micro Finance lists at 2% discount.
Amidst a slowdown in mainstream IPO activity in 2022, the small and medium enterprises (SME) segment has been robust. The last three months saw 34 SME IPOs, compared to 33 in the previous quarter.
“A few more quarters like this will hopefully bring back some buoyancy to the market,” Singhal added.