In a recent release of the Q4 IPO Trends report, EY India, a leading global professional services organization, highlighted India's performance in the Initial Public Offering (IPO) market for the year 2023. The report underlined the emergence of Indian stock exchanges, including the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), as global leaders in IPOs.
Record-breaking Numbers in Q4 2023
During the fourth quarter of 2023, the primary markets, represented by BSE and NSE, saw a substantial uptick with a total of 31 IPOs, including one InvIT. This marked a 72 per cent increase compared to the same period in 2022 and a substantial 41 per cent increase over Q3 2023.
The Small and Medium Enterprises (SME) markets also featured a growth, recording 61 IPOs in Q4 2023, reflecting 79 per cent and 30 per cent increase compared to Q4 2022 and Q3 2023, respectively.
The fourth quarter of 2023 emerged as a standout period, contributing nearly 40 per cent of the total listings for the year. Despite a slow start in the first half, over 18 companies filed their Draft Red Herring Prospectus (DRHPs) in Q4 2023.
Adarsh Ranka, Partner and Financial Accounting Advisory Services Leader at EY Global, expressed optimism about the future, stating, “Looking ahead to Q4FY24, the Indian IPO market is anticipated to continue its upward trajectory, buoyed by optimistic investor sentiment, a robust economy, and expectations of lower inflation and rate cuts in 2024."
Sectoral Trends and Regulatory Changes
From a sectoral perspective, the Power & Utilities, Health, Automotive & Transportation, and Banking & Capital Markets sectors were the most active based on recent DRHP filings. An amendment by SEBI to the Real Estate Investment Trusts Regulations, 2014, ease the creation of Small & Medium Real Estate Investment Trusts (SM REITs), is expected to further drive growth and innovation in the market.
In Q4 2023, the Consumer Products & Retail, Diversified Industrial Products, Automotive & Transportation, and Technology sectors were particularly active, accounting for 21, 14, 9, and 9 IPOs, respectively, across main and SME markets. Tata Technologies Limited led the issue size as the largest IPO, raising USD 0.37 billion in Q4 2023.
