Investors become more selective amid India's rising IPO pipeline
A large number of companies are seeking to go public as market participants note a shift toward scrutinising valuations and earnings visibility.
India's initial public offering (IPO) market is entering the new Samvat year with a significant number of companies preparing to list, even as investors show increased selectivity, according to a report by Mint.
Data from Prime Database shows that 124 companies have valid Securities and Exchange Board of India (Sebi) approvals to raise ₹ 2.45 trillion. An additional 130 companies are currently awaiting regulatory clearance after filing their offer documents.
In the first half of the financial year, 78 Indian companies raised a record ₹ 94,205 crore through mainboard IPOs. This represents a 35 per cent increase from the ₹ 69,533 crore raised by 65 IPOs during the same period last year.
Neha Agarwal, managing director and head of equity capital markets at JM Financial, said the pipeline is deep and healthy. She noted that while issuers want to access the market, investors are focusing more on pricing discipline, the quality of earnings, and how business models handle inflation and currency movements.
Amit Ramchandani, managing director and chief executive at Motilal Oswal Investment Advisors, said that while the upcoming pipeline looks strong, market conditions have become tougher, leading investors to take a more measured approach.
P. Krishnan, managing director and chief investment officer at Spark Investment Management, noted that private equity funds have used IPOs, mostly through offer-for-sale components, to secure exits. He warned that current valuation and listing gain levels have no precedent for sustaining across history.