Last week, Bombay Stock Exchange CEO, Sundararaman Ramamurthy, said almost 100 companies have filed draft prospectuses for initial public offerings (IPOs). If all these offerings came to pass it is estimated they could raise more than US$11.6bn.
This strong pipeline is made all the more interesting by the fact that outside of India and the US technology sector, capital markets are particularly quiet – especially in Europe.
In October, Hyundai Motor India completed the largest IPO in Indian stock market history, raising US$3.3bn – a figure that dwarfed every other listing in the whole of Asia in 2024.
Other Indian subsidiaries of global corporations are expected to follow suit in 2025 with LG Electronics India having already filed for an IPO that could raise as much as US$1.8bn. Such listings can significantly increase the valuations of multinationals with a sizeable presence in India.
But even these listings could be blown out of the water by a domestic company. Telecoms firm Reliance Jio Infocomm is expected to go public in the second or third quarter of the year and could end up pocketing well over US$5bn.
According to Ramesh Srinivasan, Managing Director and CEO of Kotak Investment Banking, valuations in the Indian market are attractive and sustainable. He describes local capital markets as a standout performer globally and expects this trend to continue as domestic mutual funds and other domestic investors compete with international investors.
Sumith Kamath, Founder & Managing Director at Raadhi Advisors agrees the IPO boom is being fuelled largely by Indian investors, including high net worth individuals and family offices.
“Massive domestic liquidity is the ultimate game changer,” he says. “Systematic investment plans have been delivering consistent inflows to mutual funds, giving them the firepower to participate in larger IPOs. The market is witnessing a democratisation of investment, with money flowing in from various sources including provident funds and institutional investors.”
Head of Equity Capital Markets at Nomura, Mahesh Natarajan, says the average deal size nearly doubled in 2024 and he expects that trend to continue this year. He also expects foreign portfolio investors to continue to support Indian IPOs.
Kotak Securities notes that while there is still huge interest in traditional sectors such as financial services, electric vehicles and automotive technology are capturing increasing attention. Smaller players are also making their mark, offering opportunities for investors looking to diversify their portfolios.
Data from the National Stock Exchange of India suggests that 3.5 million new retail investors entered the stock market last year, pushing the total number of investors to more than 108 million.
The IPO market is set to receive a further boost from regulatory developments. The Securities and Exchange Board of India’s updated disclosure requirements require companies to make clearer financial, operational and governance disclosures and make it easier for smaller companies to go public.
Murthy Grandhi, Company Profiles Analyst at GlobalData thinks a combination of surging demand from retail and foreign portfolio investors will see Indian capital markets gather even more pace over the coming months.
“This reflects issuer confidence and investors’ insatiable appetite for listing day pops (when a company’s stock spikes on its first day of trading) as well as long-term growth plays,” he says. “Surging private capital expenditure and the government’s focus on infrastructure and core sectors create the perfect recipe for capital market dynamism.”
