With ₹1.62 lakh crore raised in 2024, India's IPO industry hit new heights because to noteworthy offerings like Hyundai's. Major initial public offerings (IPOs) are expected for 2025, but investor attention may turn to quality as worries about the viability of the expanding SME sector grow.
IPO Market Outlook: With over 90 firms raising a total of ₹1.62 lakh crore in 2024—two times more than the ₹49,436 crore raised in 2023—it was a landmark year for the Indian IPO market. Hyundai Motors India's ₹27,870 crore IPO, which not only outperformed all other IPOs of the year but also took the title of largest IPO in India's history, surpassing LIC's ₹20,557 crore IPO in 2022, was the highlight of this incredible accomplishment.As 2025 approaches, focus turns to a series of high-profile initial public offerings. Well-known companies like Reliance Jio (worth over $100 billion), Flipkart ($36 billion), and LG India (worth $15 billion) are getting ready to penetrate the main marketplaces. However, the crucial query still stands: Will India's initial public offering (IPO) market continue to grow in 2025?
The SME IPO Industry: A Two-Sided Sword
In 2024, the SME IPO market was a microcosm of both unbridled excitement and harsh reality. The segment's attractiveness was emphasized by record-breaking capital inflows, but its vulnerabilities were brought to light by intense regulatory scrutiny and governance concerns. Even though small and medium-sized businesses raised previously unheard-of sums, the sector came under scrutiny due to worries about inflated valuations, poor corporate governance, and stock price manipulation.
"SEBI's stricter regulations are aimed at strengthening SME IPOs by filtering out weaker players, creating a more reliable market," said Trivesh D, COO of Tradejini, in response to these trends. In 2024, the SME IPO Index surged 143%, surpassing the Mainboard's 33% increase. However, sustainability is an issue given average returns of 105%. Investors continue to leap in without doing adequate due diligence, which makes me believe that SME IPOs are currently in a bubble. Since the excitement of 2024 might not last, a correction is probably in store for 2025. Strong Mainboard IPOs should be prioritized, while SME IPOs with reliable promoters and sound financials should be carefully chosen.
The Mainboard IPO Market's Resilience
Analysts predict that the momentum shown in 2024 will continue into 2025, demonstrating the larger IPO market's resiliency.
"The IPO market will continue to exhibit vibrancy and resilience in 2025, maintaining its momentum from 2024," said Narendra Solanki, Head of Fundamental Research-Investment Services at Anand Rathi Shares & Stock Brokers, who expressed confidence for the year 2025. This year, we might anticipate a sizable number of issuances, which would closely resemble the strong activity from the year before. The market's strength is demonstrated by the IPOs that have already been issued in 2024, with a total value of about ₹1.35 lakh crore. With significant offers expected from well-known businesses like Tata Capital, LG, Jio, and NSE, among others, 2025 has the potential to easily reach ₹1 lakh crore in IPO issuances.
The Mainboard IPO Market's Resilience
Analysts predict that the momentum shown in 2024 will continue into 2025, demonstrating the larger IPO market's resiliency.
"The IPO market will continue to exhibit vibrancy and resilience in 2025, maintaining its momentum from 2024," said Narendra Solanki, Head of Fundamental Research-Investment Services at Anand Rathi Shares & Stock Brokers, who expressed confidence for the year 2025. This year, we might anticipate a sizable number of issuances, which would closely resemble the strong activity from the year before. The market's strength is demonstrated by the IPOs that have already been issued in 2024, with a total value of about ₹1.35 lakh crore. With significant offers expected from well-known businesses like Tata Capital, LG, Jio, and NSE, among others, 2025 has the potential to easily reach ₹1 lakh crore in IPO issuances.
This optimistic perspective is supported by a number of variables. Confidence in the primary market has been strengthened by the equities markets' ongoing optimism, rising investor awareness, and sound liquidity circumstances. Furthermore, favorable domestic economic conditions and a strong appetite for risk in the pursuit of wealth creation offer a good basis for long-term demand.
The Secondary Market's Function
Another level of complication is introduced by the connection between the primary and secondary marketplaces. The interaction was emphasized by Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, who stated that "the subdued secondary market is directly related to the primary market pipeline."As more and more paper gets floated, liquidity from this segment will move into the primary market as long as the secondary market is kept quiet.
Sheth added that as long as listing advantages continue to be alluring, the primary market's buoyancy is anticipated to last. "The primary market may lose its appeal to investors if there is a significant crash in the secondary market and listing gains disappear," Sheth said.
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