IPO activity slows down in India amid market correction
What's the story
The Indian initial public offering (IPO) market has slowed down considerably in the last few weeks, with no main-bourse IPOs.
The trend comes after a period of intense activity in 2024 and is largely due to a correction in the secondary market.
In January and February alone, only five firms went public in January and four in February, as opposed to 16 listings in December 2024.
Recent listings
Quality Power Electrical Equipment Ltd's IPO
Quality Power Electrical Equipment Ltd was the most recent company to launch an IPO, opening for a three-day bidding on February 14.
However, this period also saw at least three firms - Advanced Sys-tek, SFC Environmental Technologies, and Viney Corporation - withdraw their IPO plans by pulling their draft papers.
This further indicates a slowdown in new listings during this time.
Previous success
2024: A remarkable year for Indian IPOs
The decline in new listings comes after a stellar 2024, when 91 maiden public issues collectively raised around ₹1.6 lakh crore.
The surge was fueled by strong retail participation, a resilient economy, and booming private capital expenditure.
However, the recent correction in the secondary market has affected the share prices of many listed companies and diverted the investors' attention back to their existing portfolios rather than new listings.
Expert opinion
Bhavesh Shah on IPO market slowdown
Bhavesh Shah, the Managing Director and Head of Investment Banking at Equirus, told PTI that the slowdown is mostly a result of the secondary market correction.
He emphasized that lowered investor attention on new IPOs has contributed to the slowdown in market activity.
Despite these challenges, V. Prashant Rao from Anand Rathi Advisors remains optimistic about the longer-term outlook for India's IPO market.
Future outlook
Strong IPO pipeline and future prospects
Rao noted that despite the ongoing slowdown, there is a robust IPO pipeline.
"We are seeing an impressive number of documents getting filed and waiting for market conditions to stabilize," he said.
Currently, 45 companies with SEBI approval are planning to raise over ₹67,000 crore while 69 companies are awaiting SEBI's approval, aiming to raise over ₹1.15 lakh crore.
This indicates that while market conditions may be subdued now, the IPO market isn't stagnant.