India’s robust equity market is anticipated to sustain its momentum well into 2024, driven by high valuations that continue to attract companies and shareholders seeking funds. The country’s equity sales market surpassed Hong Kong for the first time in at least 30 years, with initial public offerings (IPOs) and follow-on share sales reaching $24.2 billion this year. India’s stock gauge recorded an 18% gain, while China’s economic challenges contributed to a nearly equivalent decline in its equities benchmark.
Udhay Furtado, co-head of ECM, Asia Pacific at Citigroup Inc., highlighted India’s capital markets as “a much more constructive story” compared to the rest of Asia, describing it as being “as wide open as we have seen it for a while.” Furtado added that larger names could be potential candidates for listings in 2024.
Among the companies in the capital market pipeline is Ola Electric Mobility Pvt., a prominent electric scooter maker, planning an IPO of up to 70 billion rupees ($842 million). Other potential offerings include Emcure Pharmaceuticals Ltd. and high-precision machine components maker Happy Forgings Ltd.
Bhavesh Shah, head of investment banking at Equirus Capital Pvt., expressed the expectation that interest in IPOs of high-quality companies will persist in 2024. The prevalence of smaller deals offers investors “the best quadrant of growth and profitability with scale building up,” he noted.
Major investors, such as SoftBank Group and the Canada Pension Plan Investment Board, took advantage of favorable valuations earlier in the year to sell stakes in companies like Paytm. The latter half of the year witnessed an uptick in IPOs, largely driven by offerings smaller than $100 million across various sectors.
Newcomers to the market have delivered impressive performances, with sixteen companies raising between $100 million and $500 million experiencing an average 72% gain since their debut. This outperforms the 55% gain in the Asia Pacific region. Notable success stories include Tata Technologies Ltd., the engineering research unit of Tata Motors Ltd., and Mankind Pharma Ltd., a drugs and contraceptive maker.
Akshay Sawhne, co-head of APAC equity capital markets at Bank of America Corp., expects the positive trend to continue into the next year, with larger IPOs anticipated to enter the market. The second half of the year saw increased IPO activity in India, with deals trading well in the aftermarket. Companies like Tata Technologies, with a significant first-day pop, have contributed to the buoyancy of India’s IPO landscape.
