September Sees Unprecedented IPO Boom with Rs 12,000 Crore Raised

India is experiencing an unprecedented surge in IPO activity this year, with September standing out as a particularly remarkable month. This month saw 12 mainboard public issues, the highest number in a single month this year, and the fifth highest in the past two decades.

These 12 firms together raised over Rs 11,000 crore through initial public offers (IPOs). Additionally, 39 small and medium enterprises (SMEs) collectively raised around Rs 1,542 crore, making September the most active month for SME IPOs in the past decade.

The momentum in the IPO market is further underscored by a spike in filings. Over 40 firms filed draft documents in September, with more than half a dozen following suit on October 1. So far in 2024, 62 companies have raised a total of Rs 64,485 crore through IPOs, while 204 SME firms have collectively raised Rs 6,959 crore.

Analysts are optimistic about the continuing IPO wave, driven by markets reaching all-time highs. Major listings such as Hyundai and Swiggy are anticipated, with strong liquidity and retail participation expected to sustain the momentum through the second half of FY2025.

Prashanth Tapse of Mehta Equities highlighted that retail-driven domestic institutional investor (DII) inflows have reached a decade-high of Rs 24,000 crore, energizing both primary and secondary markets. Many IPOs in 2024 have delivered significant returns, with several witnessing 30-40% gains, further boosting retail confidence.

However, some experts are advising caution. Ajay Bagga, an independent analyst, warned that the IPO market is entering a frenzy phase, driven largely by greed. He pointed to celebrity investors buying pre-IPO shares in a food delivery platform, cautioning that their success in other fields does not make them role models for investors. Bagga believes the market is entering the latter half of the cycle, where inflated valuations may lead to post-issue corrections. Signs of excess are already apparent, such as six investment banks facing scrutiny for overcharging on IPO fees. He cautioned that while promoters and institutions are cashing out, retail investors jumping in at this stage often face poor outcomes.

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