2024: An IPO boom year as retail interest increases

2024 was a pivotal year for the Indian initial public offering (IPO) market, with an unprecedented increase in fundraising and retail participation. The lure of quick gains has led to massive subscriptions, particularly in the small and medium enterprise (SME) segment. The sharp rises in quotations have further fueled this frenzy.

Even though foreign investors have withdrawn from the secondary market, they continue to be interested in the primary market. With more ₹With $1 trillion in IPOs underway, the outlook looks bright. However, the sustainability of this dynamic in a context of potential market volatility remains a key question.

A hot streak in 2024

IPO activity in India hit a new record this year with a ₹1.4 trillion raised through motherboard and small and medium enterprise (SME) segments. It was also the year of big deals, with the average size of IPOs doubling to nearly ₹1,800 crore, signaling an increase in investor confidence and paving the way for even bigger deals to come.

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The little giants dominate

The recent wave of offerings on the primary market has captivated investors, who have responded massively. While more than a third of mainstream IPOs saw an exceptional response with subscriptions more than 50 times higher, the SME segment, in particular, outperformed its larger counterparts, with almost 70% of issues receiving this mega level of response.

More spinners and fewer winners

Retail investors are taking the IPO market by storm. Their enthusiasm has led to record activity and a new era for motherboard offerings and for SMBs. That said, the chances of getting benefits have also diminished due to this overwhelming demand.

Quick return

Response to the IPO was further boosted by strong listing performance. Retail investors have flocked to IPOs in 2024, mainly for quick gains. While traditional IPOs offered limited listing gains, the smaller segment saw a surge in listing gains, attracting significant retail interest.

Also read: Why retail investors continue to support underdogs

The dichotomy of foreign funds

Even as foreign investors remain cautious about the Indian secondary market and look to other countries like China, they continue to show keen interest in the primary market. A portion of these purchases on the primary market offsets sales on the secondary market.

A solid pipeline

With more ₹With 1 trillion IPOs underway, India’s primary market continues to thrive. Strong economic growth across all sectors and growing opportunities for SMEs have boosted investor confidence. However, the question arises: can this IPO frenzy continue in the face of possible market corrections and increased volatility?

Read also: From light-touch regulation to accountability: how Sebi is rethinking SME IPO rules