After heightened activity in 2024, there has been a slowdown in new listings, with no main-bourse IPOs hitting the market in the past three weeks due to a correction in the secondary market.
This slowdown in IPO activity is reflected in the numbers, as only five companies went public in January and four in February, compared to 16 listings in December 2024.
Quality Power Electrical Equipment Ltd was the recent IPO which opened for three-day bidding on February 14.
However, the trend of slower activity is evident as at least three companies – Advanced Sys-tek, SFC Environmental Technologies, and Viney Corporation – withdrew IPO plans by pulling their draft papers in January and February.
This shift follows a remarkable 2024 in which 91 maiden public issues collectively raised Rs 1.6 lakh crore, driven by robust retail participation, a resilient economy, and booming private capital expenditure.
Bhavesh Shah, managing director and head of investment banking at Equirus, told PTI that the slowdown is largely a result of the secondary market correction, especially in January and February, which negatively impacted the share prices of several listed companies.
As a result, investors have shifted focus to their existing portfolios rather than exploring new listings.
Shah emphasized that the diminished investor attention on new IPOs has contributed to the slowdown in market activity.
Despite this caution, V. Prashant Rao, director and head of ECM Investment Banking at Anand Rathi Advisors, pointed out that the longer-term outlook remains positive, with a strong IPO pipeline.
“We are seeing an impressive number of documents getting filed and waiting for market conditions to stabilize.
“Currently, 45 companies with Sebi approval are looking to raise over Rs 67,000 crore and 69 companies are awaiting Sebi-approval, aiming to raise over Rs 1.15 lakh crore.
“Notably, out of the 69 companies, 45 companies filed DRHPs in the last couple of months,” he said.
In the last two months alone, close to 30 companies have filed preliminary IPO papers with Sebi, and in addition, Knowledge Realty Trust– sponsored by Sattva Group and Blackstone– last week filed documents to launch its maiden REIT public issue to raise more than Rs 6,200 crore.
This influx of filings suggests that while market conditions are currently subdued, the IPO market is not stagnant.
Looking ahead, Equirus’ Shah remains optimistic, forecasting a revival of the IPO market in the next few months as market conditions stabilise.
He believes that investors will eventually return to fresh investments in new companies, supported by strong mutual fund inflows, which continue to show resilience despite some impact from market volatility.
To maintain investor interest amid these fluctuating conditions, Shah suggests that issuers may need to recalibrate their IPO valuations in line with the current market realities, potentially offering more attractive pricing to entice investors.
“To sustain investor interest amid this volatility, the companies may do some adjustments in the IPO pricing, potentially offering more attractive valuations,” Anand Rathi Advisors’ Rao said.
