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India has already taken significant strides towards cementing a place of prominence on a global platform. Several factors are conflating to fuel India’s growth aspirations and help it leapfrog its growth curve. A deep, liquid, and thriving financial market will act as a key catalyst for the India growth story. On that front, India is already fairly well-positioned, as evidenced by the resilient fund-raising momentum witnessed by the Indian markets in CY24.

Record fundraising and IPO activity: CY24 has proven to be an exceptional year for India's primary market, with INR 1.8 trillion raised through more than 317 IPOs to date—setting an all-time high. This figure surpasses the previous record of INR 1.3 trillion achieved in CY21, and significantly exceeds the INR 576 billion raised in CY23. The breadth and scale of this fundraising activity signify strong investor interest and confidence in the Indian market.

Contribution to market capitalisation: The contribution of IPOs to the Indian market capitalisation has seen a noticeable increase, rising to 2.9% in CY24 from 1.4% in CY23. However, despite this uptick, it still lags the levels witnessed in CY17 (3.7%) and CY21 (3.4%), which were notable for their extremely high levels of IPO activity relative to market capitalisation.

SME IPOs: A notable shift has been the relatively low contribution of SME IPOs in CY24, which comprises ~5.3% of the total IPO activity, down from 8.6% in CY23. Despite the reduced share, the total capital raised by SMEs in CY24 amounted to INR 92 billion, more than double the INR 49 billion raised in CY23. The dominance of large and mid-cap IPOs is evident, but SMEs still play a significant role in diversifying the IPO landscape.

Major IPOs and FPOs: Hyundai Motor made history with the largest IPO in India, raising INR 278.6 billion in October 2024 and surpassing the previous record set by LIC in May 2022 (INR 205.6 billion). The year also witnessed the largest Follow-on Public Offer (FPO) in India, with Vodafone Idea raising INR 180 billion in April 2024. This eclipsed the previous record held by Yes Bank (INR 150 billion) in July 2020 and ONGC (INR 106.9 billion) in March 2004.

With record-breaking IPOs and FPOs in 2024, India’s capital markets have proven their resilience and importance to a broad array of investors and businesses, setting the stage for a more robust and thriving future.

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IPO flavours: What’s hot and what’s not!

India’s IPO market succinctly captures both economic and investor sentiment in the country, reflecting broader changes and underscoring key trends in terms of sectoral activity. Key trends of note are highlighted below:

1. Sector rotation continues to be the big play with automobiles, telecom, retail, capital goods, and e-commerce holding sway in CY24: As the contours of the economy change, sectors, and correspondingly, fund raising activity, experience shifts. In CY24, automobiles, telecom, retail, capital goods, and e-commerce were the dominant sectors, accounting for 59% of the total issue size from 83 companies. This reflects current trends in consumer-driven growth, digital transformation, and infrastructure development.
2. Not by small measure: Interestingly, the growth witnessed by select sectors has been remarkable, underscoring not just a shift in preference but an overwhelming endorsement of sectors that are likely to lead the next wave of growth for India. Automobiles led from the front with contribution increasing from a mere 4.1% in CY23 to 20.2% in CY24. Other sectors that witnessed a noteworthy increase in contributions included telecom (0.1% in CY23 to 12.8% in CY24, and e-commerce (1.6% in CY23 to 8.2% in CY24).
3. Win some lose some: Correspondingly, select sectors also fell out of favour with healthcare (fell from a contribution of 16.3% in CY23 to 5.9% in CY24) and technology (from a contribution of 9% in CY23 to 0.7% in CY24) witnessing the sharpest fall.
4. Contrasting interests: Over the years, sectors like e-commerce, telecom, and retail have gained prominence, reflecting the accelerating digital economy and consumer-driven growth. On the other hand, sectors like capital goods and real estate have seen fluctuating prominence, perhaps due to cyclical economic factors like infrastructure booms and real estate market cycles. Separately, the financial and healthcare sectors continue to see concentrated issuances, likely driven by economic and demographic factors, such as financial inclusion, the insurance boom, and healthcare demand.

The transformation in sectoral representation highlights India’s evolving economic structure, with sectors like e-commerce and telecom coming to the forefront, while historically dominant sectors like BFSI and Insurance still playing significant roles. These shifts reflect broader structural changes in the economy, including urbanisation, digitisation, and a rising consumer class.

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