IPO Craze: Retail investors are anticipated to continue flooding into Initial Public Offerings in India this year, as new stocks outperform the broader market and international listings. According to Bloomberg data, shares that began trading in India this year have increased by an average of 57% since their debut. This compared to 32% in Asia Pacific and is more than double the global average, according to the data.
At least 15 other companies are working on offerings that could be available in the next months, with the potential to generate $11 billion overall. Retail investors have been critical to the success of such sales in India, which is expected to be one of the hottest IPO markets in the world in 2024 as rising valuations and solid economic prospects entice issuers.
An Unstoppable Force
"At the moment it seems like a juggernaut that's not going to stop anytime soon," said Vineet Arora, manager of the Singapore-based NAV Capital Emerging Star Fund. "I speak with a lot of younger generation investors. Most of them do not wish to buy a house or real estate, which is an asset that is normally purchased shortly after starting employment. Now that money is making its way into the stock market.
Retail investors bid for over $10.6 billion in shares sold in 36 IPOs on Indian exchanges this year, according to statistics from Prime Database Group. According to the data, the amount was more than 12 times that of the share made available to them. All new share sales met their individual quotas.
Individual buying has not slowed since regulators increased supervision in the first quarter, following numerous minor companies that failed shortly after listing. To eliminate what they dubbed "malpractices," authorities adopted steps to limit retail engagement by restricting credit to them for share purchases.
Quick Money
Seven IPOs that began trading in recent months drew individual demand that exceeded the available funds by more than 50 times. Exicom Tele-Systems, an electric vehicle charging startup, was one of the most popular offerings, with retail investors bidding for 120 times more shares than were available. The stock is up about 230% from its Initial Public Offering price.
While individual involvement is projected to remain high, many investors do not want to hold onto their investments in certain stocks for long, according to Pranav Haldea, Managing Director at Prime Database Group. "Most retail investors basically come in to flip and are not studying the companies or sector and financials," according to Haldea. "With the kind of listing gains we are seeing now, if one is able to get allotment, there is quick money to be made," he declared.
