The primary market was in full action in August 2024, as the total fund raised through an initial public offering (IPO) touched a 27-month high. Ten mainboard IPOs in August cumulatively raised around ₹ 17048 crores, the highest since May 2022. On top of that, 57% of the funds raised were from fresh equity issues, which amounted to ₹ 9715 crores while the remaining ₹ 7333 crores were raised via offer for sale (OFS). So, what made the IPO market zoom significantly in the previous month? Let’s find out.
Reasons behind the August IPO Boom
Though the start to this fiscal was slow in terms of IPO launches due to the Lok Sabha Elections from the beginning of Q2, it started picking up. Primary reasons driving the IPO boom include –
- Excellent economic development in both rural and urban areas
- Companies exceeding their earning records, and targets which encourages other companies to launch their IPOs
- Strong positive sentiment ruling the equity markets in India
- Pro-growth and stable government – economic policies in place
- Expectations of rate cuts as US Fed signals and following which India can cut rates too
- IPO investors are driven by listing gains as most of the IPOs are oversubscribed which offers great listing gains
- Increasing investors’ confidence with excellent performance of Indian equities
The rise of IPOs in August 2024 was more significant as the volatility in the market was quite high. Nifty 50 continued a winning streak for an entire fortnight, which has been a new record as well.
Top IPOs in August 2024
The mainboard IPOs in August that raised over ₹17000 crore of ipo funds included –
- Ola Electric Mobility raised ₹6145 crore
- Brainbees Solutions raised ₹ 4193 crore
- Premier Energies raised ₹ 2830 crore.
- Ceigall India raised ₹ 1253 crore
Apart from these above companies, Bazaar Style Retail raised ₹ 835 crore, followed by ECOS India and Interarch Building which raised ₹ 600 crore.
On the very first day of these IPO launches, they were mostly oversubscribed. This attracted retail investors more even though the valuation of the secondary market was quite high. In most of these IPOs, the listing day gains were phenomenal and the grey market premium was over 20% and even reached 100% above the price band in certain cases.
Heavily subscribed IPOS
| Companies | Oversubscription |
| Unicommerce E-Solutions | 168.35 times |
| Orient Technologies | 155 times |
| Saraswati Saree Depot | 108 times |
IPO Market – 2024 Vs. 2023
Even though due to elections, the market witnessed a slowdown, still the number of IPOs launched in the first eight months of 2024 was almost triple the IPOs during the corresponding period last year. It was 56 IPOs till August which raised over ₹ 65000 crore compared to ₹ 15051 crore raised from 20 IPOs during the first eight months of 2023.
Future Primary Market Actions
In August itself, 25 companies filed their draft red herring prospectus (DRHP) with SEBI. If you consider the year-till-date data then 92 firms filed their DRHP, which is the highest number since 2021 when 120 companies filed the draft papers.
With the favorable market conditions and stable economic policies, more companies are filing draft RHP with SEBI. It is about not only the companies who are raising funds but also the investors who are getting varied options for equity investments. The early investors are exiting using these IPOs, which is one thing that retail investors need to keep in mind and another worrying factor is investors flocking over IPO investments only for listing gains.
Wrapping up
The IPO market is booming without a doubt, however, the challenges can’t be ignored. While IPOs can open a door of opportunities, it is crucial to do your due diligence before investing in any of these IPOs.
Source: MoneyControl
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