Firms likely to raise 70K; IPOs pipeline will continue to be strong in 2024

Firms likely to raise 70K; IPOs pipeline will continue to be strong in 2024

The pipeline of initial public offerings (IPOs) is likely to remain strong for 2024, with 27 companies looking to raise Rs 28,500 crore presently holding valid approval from the Securities and Exchange Board of India (Sebi), according to PRIME Database.

In addition, another 36 companies looking to mop up a combined Rs 40,500 crore are awaiting approval from the regulator. Of the total 63 firms, three are new-age tech companies (NATCs) eyeing roughly Rs 16,000 crore. These include, OYO, Digit insurance and FirstCry.

In 2023, 57 corporates raised Rs 49,434 crore through mainboard IPOs, which was 17% lower than the Rs 59,302 crore mobilised by 40 IPOs in 2022, according to PRIME.

Interestingly, if one were to exclude the mega IPO by LIC in 2022, IPO mobilisation increased by 28% in 2023 from the previous year. Haldea said the overall public equity fundraising increased by 59% to Rs 1.44 trillion in 2023, from Rs 90,886 crore in 2022.

However, the average deal size was down significantly to Rs 867 crore in 2023, compared to Rs 1,483 crore in 2022 and Rs 1,884 crore in 2021.

While the earlier part of the year was lukewarm in terms of number of launches, there was a late surge, with 40 of the 57 IPOs coming in just four months of the year — August (7), September (14), November (8), and December (11).

Haldea pointed out that while entities from across sectors tapped the IPO market, BFSI was a key sector that saw limited activity with just Rs 6,190 crore (or 13%) being raised (in comparison to 46% in 2022). Among NATCs, too, there were just two launches — Yatra and Mamaearth.

The overall response from the public was also encouraging. Of the 57 IPOs, 41 received a mega response of more than 10x (of which 16 received more than 50x) while nine were subscribed by more than 3x. The remaining seven saw subscription between 1x and 3x.

He added that the IPO response was further buoyed by strong listing performance. The average listing gain (based on closing price on listing date) increased to 29%, in comparison to 11% in 2022.

Of the 57 IPOs, 40 gave a return of over 10%. Tata Technologies gave a stupendous return of 163%, followed Ideaforge (93%) and Utkarsh SFB (92%). Also, 53 of the 57 IPOs are trading above their issue price (closing as of January 1) with an average return of 46%.

In 2023, 87 entities filing draft papers with Sebi for approval, in comparison to 89 in 2022. On the other hand, 2023 saw 40 companies looking to raise nearly Rs 70,000 crore allowed their approval to lapse, with three companies looking to raise Rs 3,550 crore withdrawing their offer document. A further six firms (looking to raise ₹10,800 crore) saw Sebi return their offer document.