IPO boom: Record Rs 1.6 lakh cr raised in 2024; new year to see greater heights

Fundraising via IPOs in India hit another landmark as economic growth, favourable market conditions and improvements in the regulatory framework helped companies raise a record Rs 1.6 lakh crore in 2024, while the pipeline for the next year holds out bigger promise.

This exceptional year not only reflected the confidence of issuers but also highlighted investors' eagerness to seize listing-day gains or back companies with strong long-term growth potential.

The year was marked by Hyundai Motor India's historic IPO, the largest in the country's history, which raised Rs 27,870 crore.

Companies of varying market capitalisations -- large, mid, and small -- tapped into the IPO route in 2024, with the average issue size rising significantly from Rs 867 crore in 2023 to over Rs 1,700 crore in 2024.

The exceptional vibrancy of the IPO market was evident, with December alone seeing at least 15 launches.

"Rising retail participation, strong domestic inflows and active participation by FPIs (even though they have been net sellers in the secondary market), private capex increase and the government's strategic focus on infrastructure and key sectors have collectively laid a strong foundation for the fundraising momentum in India," V Prashant Rao, Director & Head - ECM, Investment Banking at Anand Rathi Advisors, said.

Fundraising momentum is expected to accelerate further in the New Year, potentially surpassing 2024's record figures, market analysts said.

"Based on the 75 IPO documents, which are at various stages of approval/ marketing and the deal pipelines, we expect issuance activity in 2025 to cross Rs 2.5 lakh crore," Munish Aggarwal, Managing Director and Head of Equity Capital Markets at Equirus, said.

The IPO pipeline for the next year is set to feature major offerings, including HDB Financial Services' proposed Rs 12,500 crore issue, LG Electronics India's Rs 15,000 crore public float, and Hexaware Technologies' Rs 9,950 crore offering.

According to data available with the exchanges, 90 maiden public issues were launched in 2024, collectively raising Rs 1.6 lakh crore. This includes eight IPOs scheduled to conclude on December 23-24. Besides, the Rs 500-crore IPO of Unimech Aerospace and Manufacturing is slated to open on December 23.

Additionally, Vodafone Idea raised Rs 18,000 crore through a follow-on public offer (FPO).

About Rs 1.6 lakh crore raised in 2024 far exceeded Rs 49,436 crore garnered by 57 firms through IPOs in 2023.

By comparison, 2021 saw 63 companies raising Rs 1.2 lakh crore, marking the best IPO year in two decades, driven by abundant liquidity, increased retail investor participation, and sustained euphoria in the primary market.

The resurgence in activity also extended to the SME segment, where a record 238 small and medium enterprises raised Rs 8,700 crore, nearly doubling the Rs 4,686 crore raised in 2023, according to the data provided by primedatabase.com.

This growth reflects increasing interest in SME public offerings, although it comes with heightened risks for retail investors.

In response, Sebi decided to introduce stricter regulatory frameworks, including profitability requirements, a cap on the offer-for-sale (OFS) component and a "draw of lots" system for non-institutional investors (NIIs) to safeguard smaller investors.

Experts attributed this year's robust IPO activity to a stable economic environment, policy continuity at the central government level, and broad-based economic growth.

"Stable economic environment, policy continuity at the central government level combined with broad-based growth have encouraged companies and investors to raise funds. Foreign portfolio investors have also been big buyers, especially in the larger IPOs," said Pranjal Srivastava, Partner-Investment Banking at Centrum Capital.

Several factors, including private equity exits, sponsor-driven sales, and shifts in corporate funding strategies, have also driven the IPO activity.

"The resurgence of manufacturing and increased private capital expenditure are key contributors as companies look to fund expansion and modernisation. Many businesses are also focusing on diversifying their funding sources by shifting from debt-heavy models to equity, ensuring stronger balance sheets and reduced leverage," said Neha Agrawal, MD & Head, Equity Capital Markets at JM Financial Institutional Securities.

Among the year's largest main-board IPOs, Hyundai Motor India led the pack, raising Rs 27,870 crore, followed by Swiggy (Rs 11,327 crore), NTPC Green Energy (Rs 10,000 crore), Bajaj Housing Finance (Rs 6,560 crore), and Ola Electric Mobility (Rs 6,145 crore).

In contrast, Vibhor Steel Tubes launched the smallest IPO, raising just Rs 72 crore, indicating the diversity of companies accessing the capital markets.

For companies, going public provides crucial funds for expansion, working capital, and debt repayment while enhancing visibility and attracting new business opportunities. IPOs also serve as an exit strategy for long-term investors.

Interestingly, the IPO subscription ratios have been exceptionally high this year. Vibhor Steel Tubes saw an impressive subscription of 320 times, while other offerings like KRN Heat Exchanger and Refrigeration, Manba Finance, and Gala Precision Engineering were each subscribed over 200 times.

Additionally, IPOs of companies like One Mobikwik Systems, Unicommerce eSolutions, Diffusion Engineers, BLS E-Services, and Exicom Tele-Systems were subscribed more than 100 times.

This strong demand translated into substantial listing gains, with over 60 companies delivering positive returns on their debut day.

Vibhor Steel Tubes, BLS E-Services, Bajaj Housing Finance and KRN Heat Exchanger delivered more than 100 per cent gain, reflecting robust investor demand.

Meanwhile, India's equity markets also saw record-breaking performances, with the NSE Nifty 50 reaching an all-time high of 26,216 points on September 27 and the BSE Sensex peaking at 85,836 points on September 26, supported by the country's robust economic growth outlook.