India's New IPOs Surge Amid Market Decline, Signaling Robust Demand
Despite a broader market sell-off, India's recently listed stocks have bucked the trend, indicating sustained appetite for initial public offerings (IPOs).
Data from Bloomberg shows that the 23 stocks that have debuted in India this year have witnessed an average gain of 15% against their offer prices. This contrasts with the benchmark NSE Nifty 50 Index, which has declined by over 2% in the same period.
Despite concerns over slowing economic growth and earnings, demand for new equity offerings remains strong. The Securities and Exchange Board of India (SEBI) reports currently processing over 60 IPO applications.
"New listings will continue to emerge," said Neha Agarwal, managing director and head of equity capital markets at JM Financial Institutional Securities Ltd. "Domestic investors remain confident, so I don't anticipate a pullback."
Agarwal predicts that India's IPO market will generate $25-$30 billion this year, surpassing the record $21 billion raised in 2024.
While IPO stocks are not immune to market sentiment, they have generally outperformed the broader market. However, some high-profile listings from 2024 have faced selling pressure.
This year's IPOs have primarily been smaller in scale, with most raising less than $100 million. Upcoming large-scale offerings include LG Electronics Inc.'s plan to list its Indian unit, potentially raising over $1 billion. HDB Financial Services Ltd., a subsidiary of India's largest private-sector lender, aims to raise up to $1.5 billion through an IPO.
"The equity pipeline is robust," said Kunal Vora, India strategist at BNP Paribas SA. "Demand for equity issuances is buoyed by domestic mutual funds, which are receiving inflows from retail investors."
The trend is expected to continue as long as the supply of IPOs is adequately absorbed by investors.