IPO Markets

Year 2023 was a stellar year for IPOs in a slew of attractive listings. The latest week saw 5 IPOs hitting the market and seeing buying interest of close to Rs3.50 trillion on Rs7,500 crore of IPO offering.

Mainboard IPOs are back

After the lull of 2022, the IPO market is back in the saddle. However, the big story in 2023 is not so much about the amount of funds raised, but the kind of performance that these IPOs have seen. For example, a total of 45 IPOs listed in the year 2023 as of November 25, 2023. Out of these only 4 IPOs are quoting at below the IPO price with the other 41 IPOs quoting at a premium to the IPO price. That makes it a 90% success rate and that is a real good feeling for IPOs.

Several multi-baggers in 2023

It is not just about the success ratio, but also about the kind of returns that these IPOs have provided. Out of the 45 IPOs listed in year 2023, five IPOs more than doubled since listing while, eight IPOs have given more than 80% returns. A total of 20 IPOs have given (or nearly half the IPOs of 2023) have given over 40% returns since listing. Remember, these are just pure returns and not the annualized returns, so the annualized figure could be much higher. But, that is the bottom line and a virtuous cycle has been created. The attractive returns on IPOs in year 2023 is driving demand and that is evident in the latest IPO week.

Big IPO effect – How is it?

What we have seen in the past is that the mega IPOs struggled to get good subscription numbers. Let us focus on the IPOs of above Rs 1,000 crore. The biggest IPO of 2023, Mankind Pharma at Rs 4,326 crore got 15.32X response. Among big-ticket IPOs getting over 30X subscription were SBFC Finance at 74X, Tata Technologies at 69.4X, IREDA at 38.8X, Cello World at 41.69X, JSW Infra at 39.4X, etc. Of course, in the early part of the year, the cancellation of the Rs20,000 crore FPO of Adani Enterprises dampened the IPO sentiments. It is, therefore, all the more creditable, that not just the Adani group stocks but even the IPO market has bounced from lows.

What triggered this shift?

IPO markets have learnt their lessons from the last 2 years of the digital fiasco. Companies are not going overboard in pricing the IPOs and they are making it a point to leave something on the table for the investors. Second, the business models have been a lot more mundane, but also decipherable. Above all, tighter IPO norms and more disclosures ordered by SEBI, has made the IPO market a lot more stable. That has been the real reason for the shift.