The soaring of India** has made the IPO market also hot.
According to Dealogic, in January this year alone, 21 companies in India raised about 6$7.8 billion, up from $17 million in the same period last year. Meanwhile, data from brokerage firm IIFL shows that 66 companies have now submitted listing documents to Indian regulators, signaling that more companies are on the horizon.
Meanwhile, in 2023, India's IPO raised a total of nearly US$8 billion, and India's total market capitalization reached about US$4 trillion, making it the world's seventh-largest largest after Hong Kong.
Analysts point out thatThe positive outlook for India's economic growth, improving corporate earnings, high interest from foreign investors, the positive attitude of a new generation of entrepreneurs, and Modi's emphasis on infrastructure and digitalization have all contributed to India's expansion, which has provided a strong impetus to the development of India's IPO market.
There are also those who thinkIn the short term, the IPO market is still strong, but in the long term, India** valuations are high and there are downside risks.
In terms of economic growth,Investors are generally optimistic about India's economic growth and expect India's gross domestic product (GDP) growth to reach 7% this year. This growth expectation has strengthened the market's confidence in the company's earnings prospects, and the rapid growth of the Indian economy has provided a strong foundation for the company.
Secondly, India's Modi** is building infrastructure and digitalizationNot only has it boosted the growth of large corporations, but it has also attracted millions of individual investors to India**. By the end of 2023, the total number of trading accounts in India hit nearly 1400 million new high. 2024 is India's first year, and Indian Prime Minister Narendra Modi is seeking re-election, which has given a further boost to these areas last Thursday when he announced an increase in public spending in his election year's budget.
In addition, India** is valued for its economic growth potential and focused investment in infrastructure and digitalization in recent yearsIt is favored by domestic and foreign investors. According to Société Générale, foreign investors poured more than $20 billion into India** in 2023, a figure ahead of the rest of Asia.
Also, the positive attitude of a new generation of entrepreneurs has also contributed to the IPO boom. Nirmal Jain, founder of IIFL, pointed out that in the past, founders tended to be more conservative and preferred to keep their information private. In contrast, a new generation of entrepreneurs has risen with a more open and positive attitude towards public offerings and capital markets, so the potential of IPOs for Indian companies is huge and untapped.
India** is strong in the short term, but in the long term, valuations in India are high and risks remain. Some analysts have warned that India's Sensex index has risen by more than 20% in the past 12 months, which has pushed valuations to record highs, and it is necessary to pay attention to downside risks in the future.
Kunal Vora, head of India** research at French bank bnp paribas, said:
"Given the company's strong fundamentals and optimistic expectations for economic growth, the strong momentum in the IPO market is likely to continue in the near term. But in the long run, valuation is one of the main concerns of the market right now. ”Not only that, but many Indian IPOs have underperformed in the long run. Since the start of 2021, companies listed in India have not only been oversubscribed by an average of 44 times, but these ** have risen by an average of about 25% on their first day of listing, according to a report by investment firm YK2 Partners. But in fact, about two-thirds of listed companies have subsequently underperformed.
Paytm, for example, was one of the first tech startups to go public in 2021 and is now trading at around Rs 609 per share, down nearly 70 per cent from its IPO.
Analysts believe that while the Indian IPO market has shown strong demand in the short term, the long-term underperformance of many IPO companies also reminds investors to carefully assess the company's fundamentals and growth prospects before investing. Going forward, the continued interest of the India** and IPO markets may depend on their ability to deliver solid returns in line with valuations.
Raamdeo Agrawal, chairman of Indian financial conglomerate Motilal Oswal, said his co-op started eschewing IPOs this year in favor of companies that have greater transparency in the public market and have proven their financial soundness.
"A lot of investors participate in IPOs in the hope of getting a big share price** (i.e. "big pop") in the early days of listing, and what we are doing now is investing, not speculating. ”Wall Street news, welcome **app to see more.