Domestic stock exchanges BSE and NSE, including SMEs, have emerged as the top players in the world in terms of the number of IPOs and eighth in terms of issue proceeds so far this calendar year, according to EY.
In a report, the global professional services organisation said the main markets witnessed six initial public offerings (IPOs) during April-June 2023, including a fundraise by an infrastructure investment trust, compared to 14 IPOs in the same quarter a year ago and four IPOs in January-March 2023. This represents a decrease of 57 per cent compared to Q2 2022 and an increase of 50 per cent compared to Q1 2023.
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“In the SME markets, there were 32 IPOs in Q2 2023, showcasing robust growth compared to 18 and 38 IPOs in Q2 2022 and Q1 2023, respectively. This represents an increase of 78 per cent compared to Q2 2022 and a decrease of 16 per cent compared to Q1 2023,” EY said in a report.
The report further indicates a positive outlook for IPO activity in India, with around 13 companies filing their Draft Red Herring Prospectus (DRHPs) in Q2 2023, contributing to the current IPO pipeline. Most active sectors in recent IPOs include hospitality and construction, automotive and transportation, diversified industrial products and real estate.
Adarsh Ranka, Partner, Financial Accounting Advisory Services Leader, network firm of EY Global, said, “India’s current IPO market trend showcases its immense potential and has witnessed a remarkable surge in recent years. India must continue to focus on enhancing regulatory frameworks, improving corporate governance practices, and fostering investor education. In the forthcoming months, there is anticipated to be significant momentum in the Indian IPO market, encompassing both the main and SME market segments.”
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EY also added that foreign institutional investors (FIIs) are showing sustained inflows in India due to the country’s stable macroeconomic outlook, political stability, and impressive financial results, resulting in an 8 per cent market rally since April 2023. India’s consistent GDP growth of over 7 per cent reinforces positive prospects for the market.
Hospitality and construction sector took the lead in the main markets during Q2 2023 with 2 IPOs. Additionally, based on Year-to-Date (YTD) figures for 2023, automotive and transportation, diversified industrial products and real estate each saw 2 IPOs in the main markets.
Cube Highways Trust, an emerging asset class related to infrastructure investment trust, raised $637.5 million in proceeds, making it the largest IPO in Q2 2023 in terms of the issue size.
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Veenit Surana, Partner, EY India said, “The recent amendments introduced by SEBI showcase the commitment towards enhancing market transparency and governance. These changes lay a strong foundation for future IPO activity and empower companies to align with best practices, reinforcing the trust of investors in the Indian capital markets.”
The global financial services firm further added that the remarkable volume of IPOs in India, covering a diverse range of sectors and industries, showcases the country’s economic resilience and its attractiveness as an investment hub.
