The burgeoning market for equity sales in India is projected to continue into the new year as high valuations attract companies and shareholders needing capital and stock-price gains entice investors looking to avoid China.
According to Bloomberg data, India surpassed Hong Kong in terms of initial public offerings and follow-on share sales this year for the first time in at least 30 years. The South Asian market's total of $24.2 billion has been aided by advances of almost 18% in the country's stock index, while China's ailing economy has contributed to a drop of nearly the same magnitude in its stocks benchmark.
"India offers a much more constructive story for capital markets than the rest of Asia," according to the report. "It's the most open we've seen in a long time," said Udhay Furtado, co-head of ECM, Asia Pacific at Citigroup Inc. "Bigger names could be potential candidates for 2024 listings."
Ola Electric Mobility Pvt. Ltd. is one of the opportunities in the capital market pipeline. According to IFR, the electric scooter firm is planning an IPO for up to 70 billion rupees ($842 million). Emcure Pharmaceuticals Ltd. and Happy Forgings Ltd., both makers of high-precision machine components, are taking steps towards offering.
"We expect interest in IPOs of high-quality companies to be sustained in 2024," said Bhavesh Shah, head of investment banking at Equirus Capital Pvt. The prevalence of smaller transactions provides investors with "the best quadrant of growth and profitability with scale building up," he adds.
Earlier this year, investors such as SoftBank Group and the Canada Pension Plan Investment Board took advantage of pricing to sell holdings in companies such as Paytm. IPOs increased in the second half, primarily due to offerings of less than $100 million from a range of industries.
Newcomers' performances have been appealing. Sixteen companies that were listed in the country after raising between $100 million and $500 million have increased by an average of 72 percent since their initial public offering. This compared to a 55% increase in Asia Pacific, according to Bloomberg data.
Tata Technologies Ltd., the engineering research arm of Tata Motors Ltd., the developer of Jaguar Land Rover vehicles, has risen more than 140% since its initial public offering last month. It had the highest first-day pop in the country for debuts that raised more than $300 million. Mankind Pharma Ltd., a manufacturer of drugs and contraception, has risen over 80% since its initial public offering in May.
