India’s IPO Market Booms in Q1CY23, Set to Continue Strong Performance in Second Half of CY23

India has emerged as the global leader in the number of IPOs during the first quarter of the current calendar year, according to a recent report by EY. The Indian IPO market has shown resilience and development despite the ongoing global uncertainty, as seen by a 33% increase in the total number of IPOs in Q1CY23 when compared to the same time in 2022. The amount of money obtained through primary markets has decreased by 89%, but the SME sector has seen a boom in funding, with $82 million raised through 38 IPOs, a YoY rise of 123%.

Reportedly, Divgi TorqTransfer Systems’ IPO raised $50 million, which was the greatest IPO in terms of proceeds this year. The report, which closed on April 27, did not, however, include the Rs 4,300 crore Mankind Pharma IPO. There is a healthy pipeline for IPOs in the future as approximately 15 companies filed their DRHPs in the first quarter of this year. These businesses come from a range of industries, including consumer products, pharmaceuticals, technology, and financial services.

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Despite the lack of IPO activity, according to Adarsh Ranka, Financial Accounting Advisory Services Leader, partner with an Indian member firm of EY Global, Indian companies are preparing to launch their IPO early next year, either before or after the Indian general elections. According to Veenit Surana, Partner, EY India, the Indian IPO market demonstrated resilience and growth in Q1 2023, highlighting the potential for expansion of the Indian economy. EY anticipates future IPO momentum to accelerate, with both domestic and foreign investors playing significant roles.

The report states that India is positioned first globally in terms of the number of IPOs in Q1CY23, mainly due to the smaller ticket, SME IPOs. However, several larger companies withdrew their IPO filings due to market conditions or regulatory requirements.  The regulator has returned offer documents in the last quarter, requiring companies to be fully compliant at the time of filing.

Although the IPO market has been lackluster, the report predicts that it will bounce back and the unstable stock activity will stabilize. With a robust pipeline for IPOs in the latter half of the year and beyond, the Indian IPO market looks promising, and both domestic and international investors are expected to have significant involvement.

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