India set for IPO surge as more companies plan to tap equity markets
Companies are projected to raise US$18 billion through IPOs in the second half of this year, according to Jefferies Financial Group.
Indian firms appear to be moving past earlier concerns over trade and geopolitical uncertainty, increasingly turning to IPOs as a preferred means of raising capital.
REVERSAL FROM LUKEWARM ACTIVITY
The IPO surge marks a sharp turnaround from the subdued activity seen earlier this year.
Yatin Singh, CEO of investment banking at Emkay Global Financial Services, said it is partly from easing concerns over US tariffs.
'Once markets sensed that the perceived threat of tariffs to the Indian economy in particular is not as extreme as it was originally feared, there was a revival in confidence and that immediately opened up the floodgates for IPOs,' he added.
The revival is being driven by strong investment flows into mutual funds, which finds its way to IPOs and institutional investors.
According to research firm Prime Database, IPOs worth US$30 billion from 161 companies have either been approved or are currently under review by India's market regulator.
The companies span a wide range of sectors, including finance, clean technology, construction, and retail.
The IPO list includes the Indian unit of LG Electronics, which is targeting US$1.7 billion. Meanwhile, lender Tata Capital is aiming for a US$2 billion listing.
CONFIDENCE IN ECONOMIC OUTLOOK
Public listings are often aimed at raising funds for expansion, and analysts say a robust IPO pipeline signals growing confidence in India's economic outlook.
The World Bank projects India's gross domestic product (GDP) will grow by 6.3 per cent in the current financial year.
Observers said this suggests India could maintain its position as the world's fastest-growing major economy.
But not all market analysts share the same optimism, especially retail investors.
In recent years, many middle-class Indians have flocked to equities in search of high returns as markets rallied.
However, that enthusiasm has waned.
Ajay Tyagi, head of equities at UTI Asset Management, noted that valuations and investor demand for public listings have yet to return to their previous highs.
'For IPOs to go back to where they were in 2023 and 2024, you have to see the excitement in the equity markets go back once again,' he said.
'I think we are some time away from that. There has been a let off in this excitement from the retail investors and that's why you're seeing the retail participation, while still strong, in terms of magnitude it is coming down.'
There is also a lot of uncertainty still on the horizon, said experts.
Such risks could swiftly stall the IPO market's revival, as investors closely watch whether a potential US-India trade deal can avert crippling US tariffs.
Emkay Global Financial Services' Singh said: 'The tariff situation, the belief is India has got it under control and that's why markets are stable and doing okay, but it can go the other way around as well.'
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