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Year-End Analysis of India’s IPO Market for CY24

CY24: The Year Indian IPOs Stole the Spotlight

India’s IPO market in CY24 has shattered records, raising an astounding ₹1.8 trillion through 317 IPOs, surpassing past milestones and capturing global attention. This article explores the standout moments, sectoral shifts, and what CY24’s IPO boom means for India’s financial future, drawing insights from the comprehensive report by Motilal Oswal Financial Services.

What Made CY24 a Record-Breaking Year?

Imagine this: Hyundai Motors’ historic IPO raising ₹278.6 billion, setting a new benchmark. Vodafone Idea’s follow-on public offering (FPO) amassing ₹180 billion. These weren’t just numbers; they were milestones that marked CY24 as the year Indian capital markets proved their mettle.

Year-End Analysis of India’s IPO Market for CY24

India’s IPO market saw unprecedented activity, with over ₹1.8 trillion raised across 317 IPOs. This figure comfortably eclipses CY21’s ₹1.3 trillion and more than triples the Rs 576 billion raised in CY23. What is behind this surge? Let’s examine

Also read: 18 of Top 30 IPOs fail to generate excess returns: What does it mean for investors?

Why the sudden boom in IPOs?

Several factors converged to make CY24 extraordinary:

  • Investor Confidence: Amid a globally challenging environment, India’s economic resilience stood out, attracting domestic and foreign investors alike.

  • Regulatory Support: SEBI’s streamlined processes and reforms encouraged companies to tap into public markets.

  • Economic Reforms: India’s structural reforms and digital economy growth offered fertile ground for capital raising.

The report by Motilal Oswal Financial Services highlights how strategic economic policies have bolstered market sentiment, creating a conducive environment for businesses to scale and thrive.

How did IPOs Impact India’s Market Capitalisation?

The contribution of IPOs to India’s market capitalisation rose to 2.9% in CY24, up from 1.4% in CY23. While this shows remarkable growth, it remains below peaks seen in CY17 (3.7%) and CY21 (3.4%). The increasing share highlights how primary markets are becoming a key driver of financial growth, even as the full potential is yet to be unlocked.

According to Motilal Oswal’s analysis, the market’s resilience amid global headwinds has been a critical factor in the sustained IPO activity, with long-term implications for wealth creation and economic development.

What Role Did SMEs Play in CY24’s IPO Landscape?

While the dominance of large and mid-cap IPOs continued, SMEs contributed a noteworthy ₹92 billion in CY24, more than doubling their ₹49 billion contribution in CY23. However, their overall share of IPO activity declined to 5.3% from 8.6% last year.

Case in Point: Small-scale manufacturers and regional businesses leveraged the IPO platform to expand operations, adding diversity to the market while fuelling grassroots economic growth.

The report emphasises that while SMEs’ share of total activity has shrunk, their increasing absolute contributions underline their growing importance in India’s financial ecosystem.

Which IPOs Defined CY24?

  1. Hyundai Motors: With a mammoth ₹278.6 billion IPO in October, Hyundai Motors overtook LIC’s record set in 2022, marking a watershed moment.

  2. Vodafone Idea: The telecom giant’s ₹180 billion FPO was a strategic move to restructure and strengthen its market presence.

  3. Sector-Specific Highlights:

    • Automobiles, telecom, and e-commerce led the pack, reflecting changing consumer behaviours and the rise of digitisation.

Motilal Oswal’s report elaborates on how such marquee deals have not only broken records but also redefined investor interest and expectations from Indian markets.

Which Sectors Shaped the IPO Landscape in CY24?

What was hot?

  • Automobiles: From a modest 4.1% in CY23 to a whopping 20.2% in CY24, the automobile sector roared ahead, driven by the EV boom and rising consumer demand.

  • Telecom: Contribution surged from 0.1% in CY23 to 12.8%, underscoring India’s digital connectivity push.

  • E-commerce: Reflecting the shift to digital consumerism, the sector’s share grew from 1.6% to 8.2%.

What cooled off?

  • Healthcare: Dropped from 16.3% in CY23 to 5.9% in CY24.

  • Technology: Once a darling of the IPO market, tech fell from 9% in CY23 to a mere 0.7%, reflecting investor caution.

These trends highlight the dynamic interplay of economic forces, evolving consumer preferences, and emerging opportunities. The report underscores how such shifts mirror broader changes in India’s economic structure and societal needs.

How Do Sectoral Trends Reflect India’s Growth Story?

The transformation in sectoral representation reveals India’s evolving economic priorities. Industries such as e-commerce, telecom, and retail highlight the accelerating pace of digitisation and urbanisation. On the other hand, traditional sectors like real estate and BFSI maintain a strong presence, driven by cyclical economic factors and a rising middle class.

Motilal Oswal’s report draws attention to the role of macroeconomic policies in these shifts, pointing to factors such as government incentives for EVs, increased digital penetration, and robust infrastructure investments.

What Challenges Lie Ahead for India’s IPO Market?

While CY24 has been a landmark year, sustaining this momentum requires addressing certain challenges:

  1. Sectoral Imbalances: Declining interest in technology and healthcare IPOs could impact diversity in the market.

  2. SME Participation: Boosting SME share is crucial for fostering inclusive growth.

  3. Global Economic Conditions: External factors like inflation and geopolitical tensions may impact future fundraising activities.

Motilal Oswal’s analysis highlights these challenges while proposing potential solutions, including policy reforms and enhanced investor education.

What Does This Mean for India’s Financial Future?

India’s IPO performance this year isn’t just a financial statistic; it’s a testament to the nation’s rising prominence on the global stage. As sectors like e-commerce and telecom shine, they mirror the structural changes shaping India’s economy—urbanisation, digitisation, and an expanding middle class.

Looking ahead, sustaining this momentum requires:

  • Encouraging SME participation.

  • Addressing sectoral imbalances.

  • Maintaining regulatory clarity.

Motilal Oswal’s report projects a bright future for India’s capital markets, emphasising the need for continuous innovation and policy support to sustain growth.

FAQs: Understanding CY24’s IPO Boom

1. Why was CY24 a record year for IPOs? CY24 saw a confluence of factors: investor confidence, regulatory reforms, and India’s robust economic performance.

2. How did sector trends influence IPOs? Sectors like automobiles and telecom gained prominence, while traditional players like healthcare saw a decline.

3. What role did SMEs play in CY24? Despite a smaller share of IPOs, SMEs doubled their capital raised compared to CY23, showcasing resilience and growth potential.

4. What insights does the Motilal Oswal report provide? The report highlights the drivers behind CY24’s success, challenges for the future, and the broader economic implications of the IPO boom.

CY24 has been a landmark year for India’s IPO market, not just in numbers but in the stories it tells—of resilience, innovation, and global ambition. Motilal Oswal’s insights further underline the importance of this achievement as a milestone in India’s economic journey. As we close the year, the lessons and momentum from CY24 offer a blueprint for future success.

Tushar Mangl is an energy healer, vastu expert, and author of Ardika. He writes on topics like finance, personal growth, and the art of balanced living.

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