72 IPOs Hit The Primary Market in 2023 So Far; Experts Expect The Trend To Continue

The Indian primary market is witnessing a boom at the current juncture. Some 72 initial public offerings (IPOs) have hit the Indian primary market in 2023 so far out of which 28 are on the BSE main board and the remaining 44 are SME IPOs, according to a Mint report.

What is interesting is that 62 IPOs of the total 72 are in the green with respect to their issue prices, indicating the bullish undercurrent of the secondary market.

The roaring IPO market could be attributed to investors' faith in India's robust macroeconomic outlook and healthy corporate earnings which has given a strong push to the mid and small-cap space.

"A boom in IPOs happens whenever there is a boom in small and mid-cap segments. This is because almost 95 per cent of IPOs in terms of numbers are from small and small-cap companies. So, the secondary market boom in the SMC segment gets carried away into the IPO market," said G. Chokkalingam, Founder and Head of Research at Equinomics Research.

Experts and market participants expect the IPO boom to be sustained in the short term. In September, over 40 IPOs are planned out of which some 28 have already hit the market. Experts pointed out that retail investors are adding to the IPO boom as the market sentiment is upbeat, Minr reports.

Shrey Jain, Founder and CEO of SAS Online underscored that the surging market, fueled by abundant liquidity and a robust secondary market, stands as the primary driving force behind the surge in India Inc.'s fund mobilisation through IPOs.

"As the market gains momentum, retail investors are flooding in, adding to the hype. With this surge in interest, there's a growing belief that we're in the midst of an IPO boom," said Jain.

"People are beginning to expect that every IPO that hits the market will perform exceptionally well. The optimism is so high that there's a strong likelihood of India Inc. mobilising a whopping ₹1 lakh crore through IPOs," Jain said.

While the boom is expected to continue in the coming months too, experts also warn investors should not get carried away and invest only in the IPOs of the companies that have good governance, solid financials, and sustainable business models.

"It is imperative to tread with caution. Financial booms are often followed by corrections, and the Indian market will likely be no exception. As history has shown, market corrections have the potential to separate the grain from the chaff, emphasising the importance of value-driven and quality-oriented business models," Manick Wadhwa, Director of Strategy, SKI Capital Services told Mint.

"Investors are expected to become more discerning over time, prioritizing good governance, solid financials, and sustainable business models. The sustainability of this IPO boom hinges on the quality of companies listing. In the long run, only enterprises demonstrating robust performance and transparent practices will continue to attract capital," Wadhwa said.