This year would’ve been a fantastic one for IPOs in India… if it ended in September!
Jokes apart, recent listings like Hyundai India and Swiggy have barely mustered a yawn. In fact, both got only a fraction of subscriptions from individual investors compared to the record rush seen for Bajaj Housing Finance in September.
Now, IPO hopefuls and their bankers are walking on eggshells, as a decline in the market continues to dampen the mood, multiple bankers working on listings tell MONIIFY.
Ather Energy and Ecom Express, both of which filed IPO papers months ago, have postponed their plans to next year, sources say. Carlyle-backed IT services firm Hexaware is also seeking a later date, they add.
Read more: India’s Sensex is on a record run. But can it last?
Ather and Hexaware declined to comment. Ecom Express didn’t respond to a request for comment.
About 30 companies were planning to raise $5 billion this year and next. Of these about half a dozen have pushed back their plans, the sources say.
Beyond the ongoing decline in stocks, India’s economy has also slowed down in the last few months. It’s latest GDP print showed 5.4% growth for the second quarter (which in India runs from July to September), falling short of estimates around 6.5%.
Fatigue
Some recent IPOs haven’t had the best of responses, Suraj Krishnaswamy, an investment banker focused on the tech sector at Axis Capital, tells MONIIFY.
“We would ascribe this to volatile markets and, to some extent, investor fatigue.”
It HAS been one helluva year! In the first eight months, India saw 227 IPOs, higher than the US (133) and China (69), according to GlobalData.
This sense of fatigue was apparent when Swiggy, which is almost synonymous with food delivery in India, was oversubscribed just 3.6 times – a fraction of the 38.3 times its rival Zomato drew three years ago.
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The response of individual investors to Hyundai India, the largest Indian IPO to date, and to BlackBuck was also lackluster.
Perhaps, some of this was down to high valuations at launch.
Primary markets have started to cool off along with a drawdown in equity markets, says Rushabh Sheth, the founder of asset manager Karma Capital.
“As valuations in secondary markets correct, IPO valuations will also have to readjust to reality,” he says.
Roughly 40% of this year’s IPO stocks are trading below their listing prices, which will be a key factor weighing on the minds of issuers, Sheth says.
Read more: Going public, going wild: India’s 2024 IPO circus went off!
Turnaround not likely
When it comes to launching an IPO, the timing has to be just right. So a market in decline, slowing earnings and a gloomy economic outlook are hardly ideal conditions.
In fact, a weak earnings szn is also keeping people from ‘buying the dip’ right now, even more than external factors such as a mini rebound in China and Donald Trump-driven optimism about the US markets.
Citigroup and Jefferies have downgraded their forecasts for Nifty 50 companies, which are now projected to see just 5% profit growth this year — their first single-digit gain in five years.
While you wait for that rebound and an IPO to invest in, here’s a (nearly exhaustive) list of tech IPOs in the pipeline:
| IPO contender | Category | Latest private market valuation |
| Ather | Auto | $1.3 billion |
| Zepto | Delivery | $5 billion |
| Zetwerk | Manufacturing | $2.7 billion |
| PayU | Fintech | $4.2 billion |
| CarDekho | Auto | $1.2 billion |
| Pine Labs | Fintech | $3.5 billion |
| OfBusiness | Manufacturing | $5 billion |
| Groww | Fintech | $3 billion |
| Fractal Analytics | Software | $1.6 billion |
| Rebel Foods | Cloud Kitchen | $1 billion |
| Captain Fresh | Agri-tech | $500 million |
| WakeFit | Home furnishing | $300 million |
| Oyo | Hospitality | $2.5 billion |
| Meesho | E-commerce | $4.1 billion |
| Perfios | Software | $1 billion |
| Ecom Express | Logistics | $750 million |
| Urban Company | Home services | $2.8 billion |
| BlueStone | Retail | $970 million |
| Table Space | Co-working | $550 million |
| Hexaware Technologies | IT services | $3 billion |
