India's IPO market could add $3T over next 10 years
What's the story
India's initial public offering (IPO) market is on a growth trajectory, with an estimated potential to add between $2 trillion and $3 trillion in market value over the next decade. Vishal Kampani, Vice Chairman and Managing Director of JM Financial Ltd., made this prediction during a recent interview in Mumbai. He described India as "the most interesting and exciting market in the world."
Market performance
Over $6 billion raised this year
The Indian IPO market has already witnessed a successful run this year, raising over $6 billion, data compiled by Bloomberg reveals. HDB Financial Services Ltd., a shadow bank owned by HDFC Bank Ltd., recently raised $1.5 billion in an IPO. This was the largest first-time share sale of the year and one that JM Financial co-managed. Meanwhile, ICICI Prudential Asset Management Co. recently filed for an IPO to raise up to $1.2 billion.
Investor confidence
Investors betting on India's growth potential
Investors are increasingly betting on India's growth potential, building on the momentum from last year's record levels of deal activity. In 2024 alone, nearly $21 billion was raised in IPOs, including Hyundai Motor Co.'s local unit's biggest-ever listing in India and two others that exceeded $1 billion. Despite some short-term expensive valuations, Kampani believes investors can still make substantial long-term returns.
Market recovery
Nifty 50 index has gained nearly 8% this year
India's stock market benchmark, the Nifty 50 Index, has gained nearly 8% this year. The index has recovered from a low in March. Interestingly, Kampani noted that the pricing power in share sales has shifted to local investors from foreign ones over the past decade. He called it an "unexpected" development for domestic capital to emerge as a strong player in share sales.
Future prospects
'Strongest ever pipeline of deals'
Kampani said there are plenty more deals to come across sectors such as renewable energy, consumer and retail, pharmaceuticals, manufacturing, and financial services. He claimed that "we have the strongest ever pipeline of deals," with transactions getting bigger in size and more crossing the $1 billion mark. Some upcoming IPOs include Tata Capital Ltd., Phonepe, and LG Electronics Inc.'s Indian unit.
Acquisition trends
M&A activity is also on the rise
Mergers and acquisitions (M&A) are also on the rise, with companies and private equity firms actively pursuing deals despite high valuation multiples. The volume of M&A deals involving Indian firms has hit $31 billion, an 18% increase from last year. Notable transactions include French consulting firm Capgemini SE's $3.3 billion acquisition of IT outsourcing firm WNS Holdings Ltd., and Torrent Pharmaceuticals Ltd.'s $1.4 billion purchase of a controlling stake in JB Chemicals & Pharmaceuticals Ltd. from KKR & Co.