A record number of small- and medium-sized companies going public amid an equities rally has made India one of the world’s busiest listings markets this year.
So far in 2023, 184 firms have gone public in the South Asian nation, more than in any other full year, according to data compiled by Bloomberg. October saw 30 companies start trading in India, beating the US, China and Hong Kong, to name a few locations, the data show.
India’s major equity benchmarks touched record levels earlier this year, with earnings and the economy growing despite the highest interest rates since 2018. Investor demand in the world’s most populous country has also increased as slowing economic growth in China weighed on sentiment there.
“The IPO landscape is witnessing a surge in activity driven by both an urge to tap the capital markets pre-or-post Indian general elections and strong economic activity, positive domestic and foreign investor sentiment toward India,” said Adarsh Ranka, a partner with S.R. Batliboi & Associates LLP, a member firm of EY Global in India.
Analysts from Jefferies to DBS have warned that political risk from next year’s elections may weigh on Indian stocks, increasing headwinds for IPOs.
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Disappointing earnings last month from some bellwether companies saw a selloff in India’s market just as concerns about the Israel-Hamas war and higher-for-longer US rates hurt demand for riskier assets. Overseas funds withdrew $1.5 billion in the week through Oct. 27, the largest weekly withdrawal since September 2022.
While the number of India’s IPOs are at a record, proceeds are down 15% year-on-year at $4.9 billion. With most of the deals firmly in the black, last year’s larger sales such as those by insurer Life Insurance Corporation of India and delivery startup Delhivery Ltd. have handed investors losses of 36% and 17%, respectively.
The outlook for new deals is mixed. The owner of personal-care brands Honasa Consumer Ltd. cut the size of its IPO last month, while the $228 million IPO of Cello World Ltd., a maker of housewares, stationery and furniture, was almost 39 times subscribed by the last day of bookbuilding on Wednesday.