India's IPO Market Skyrockets 425% In July-September: What's Driving The Frenzy?

The country’s IPO market is on fire, breaking records left and right. According to a recent trends report by EY India, Q3 2023 alone witnessed a jaw-dropping 425% surge in IPOs, raking in a cool $1.77 billion.

Why is it noteworthy? To put that in perspective, there were 21 IPOs in this quarter, a significant jump from just four in the same period last year.

The SME sector wasn’t left behind either. They managed to raise a commendable $165.76 million through 48 IPOs in the same quarter. Leading the pack in terms of proceeds were big players like RR Kable Ltd, Concord Biotech Ltd, and SAMHI Hotels Ltd.

The sectors driving this IPO wave? Diversified Industrial Products, Consumer Products and Retail, and Technology.

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But what’s fueling this IPO frenzy? A few regulatory tweaks have played their part. One notable change is the T+3 mechanism for IPOs, which lets companies list just three days after closing the issue, a shift from the earlier six days. The standard will take effect in December 2023.

Adarsh Ranka of EY Global weighs in, attributing the boom to the upcoming Indian general elections and a robust economy. He believes this trend will roll on into H2 2024 and advises businesses to stay transparent, innovative, and in tune with market shifts.

August 2023 also saw a spike in PE/VC (private equity/ venture capital) investments, hitting $5.2 billion, a 127% year-on-year increase. The reasons? The US recession, the Federal Reserve’s interest rate decisions, and inflation, among others. With over 25 companies filing their DRHPs in Q3 2023, it’s clear that the IPO train in India is not slowing down anytime soon.

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