Dec best month for IPOs in two years with 12 market debuts

In a very good year for initial public offerings, December was cherry on the top. 12 companies went public and raised Rs 8,931.69 crore from the bourses in the last month of 2023.

This marked the best month for IPOs since December 2021, when 11 companies raised Rs 9,534 crore.

A number of companies also filed draft papers with the Securities and Exchange Board of India this month to go public next year, including Ola Electric, which is looking to raise Rs 5,500 crore through its IPO.

Overall public listings in 2023 were also the second highest in the past decade at 57, falling only behind 2021 which saw 63 market debuts. In terms of the amount of funds raised, 2023 stood at the fourth position in the past decade, with Rs 49,420 crore collectively raised by companies going public.

The reason why December did exceptionally well has more to do with the seasonality of India equity markets, which tend to perform better in the second half of the year before peaking in the early months, said Deepak Jasani, Head of Retail Research at HDFC Securities.

In fact, in October-December 2023, there were 23 IPOs in total, which is the highest number seen in the same quarter in a decade. Companies also aimed to get done with their public listings before the general elections next year, which usually see tepid market participation in the preceding months.

The second half of the year saw considerable buoyancy in secondary markets and very few companies listed in the negative or at discounted rates.

“Earlier, people used to prefer incorporating companies in the US or Singapore because they thought Indian markets weren’t deep enough if you want to list. However, that has been proven otherwise and shown that they have enough liquidity for even bigger listings like Zomato, said Neha Singh, co-founder of Tracxn.

“Indian companies are also getting higher multiples than their global counterparts. So investors and companies have realised that public listing is a predictable way to raise funds once you have reached a significant bottomline,” Singh added.

Regulatory changes also played a part, after SEBI made it mandatory for companies offering IPOs after December 1 to debut at bourses within three days of the offer closing, which was earlier optional between 6 to 3 days.

“Shortening the allotment time meant that the same money can be rotated over more IPOs. This led to higher oversubscription in most cases,” as per Jasani.

Motisons Jewellers, which went public earlier this month, is a case in point. The Jaipur-based jeweller listed at a 98% premium to the issue price and topped the chart with oversubscriptions at 119 times.

While foreign portfolio investors weren’t as interested in Indian IPOs this year, the growth was led mostly by domestic institutional investors like mutual funds and banks, high net worth individuals (HNIs), family trusts and retail investors, Jasani said.