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India seems to be on track to have a record number of initial public offerings (IPOs) in 2024. Last year, the South Asian country already saw a flood of listings, with 234 companies going to market – an increase of 56% compared to 2022 and the highest annual number since 2017, according to international law firm White & Case. In total, India’s IPO proceeds totalled $7.89 bn in 2023.
The high volume of new IPOs combined with the growth in the overall stock market even pushed the total market capitalisation of listed companies in India to $4 bn, overtaking even Hong Kong.
The boom does not appear to be slowing down. According to FactSet, there were already 130 new listings in 2024 by mid-June. Further calculations predict 55 IPOs in the coming months.
Not just domestic companies are going public in India; global corporations are also planning to capitalise on the booming market. The Indian branch of Hyundai Motors could make the largest IPO in India to date. The South Korean car manufacturer aims to raise $2.5 to 3 bn through its first share sale at a valuation of up to $30 bn, according to documents filed with the Securities and Exchange Board of India (SEBI). The IPO is expected within the next 4-6 months.
India IPO market – concerns over elevated valuations
However, concerns about elevated valuations overshadow the optimism about the booming market.
Malcolm Dorson, Head of Emerging Markets Strategy at ETF provider Global X, said India trading at around 21 times price-to-earnings is “a little expensive” but presents good relative value compared to other emerging markets. “When we look at India, we see continued economic and earnings per share growth and higher levels of profitability,” he told CNBC’s Inside India. “We need to look beyond multiples and price to intrinsic value. And India offers quality growth now.”
“We think the current market in India is hot but not yet absurd, with scope for finding good companies at reasonable prices,” wrote Amit Goel, Portfolio Manager at Fidelity International, in a market note. “Small caps are looking more speculative due to the influence of retail investors in a segment where institutional participation is relatively low, but companies with market values above $1bn are worth serious research.”
Goel points to India’s robust economy and the expected interest rate cuts by the Reserve Bank of India in the second half of this year. “With growth healthy and credit loose, the current IPO bubble could hold out a while longer,” he opined.
