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Secondary market rally triggers IPO market revival hopes, say analysts
Upcoming IPOs: A rocky, but steady recovery in the secondary markets, has put wind in the sails of India's primary market. With the worst for the stock markets, in terms of Indo-Pak war and Donald Trump's tariffs, likely on the backburner, over 60 companies are ready to launch their initial public offerings (IPOs) in the coming months.
Data from PRIME Database shows that 66 companies have market regulator Securities and Exchange Board of India's (Sebi's) approval to bring IPOs worth ₹1.02 trillion. Among these, National Securities Depository (likely IPO size ₹3,000 crore), JSW Cement (₹4,000 crore), Manjushree Technopak (₹3,000 crore), LG Electronics India (₹15,000 crore), Credila Financial Services (₹5,000 crore), and Veritas Finance (₹2,800 crore) are some of the marquee names waiting to go public.
Analysts feel a meaningful revival in the primary markets is possible over the next six-to-eight months if the secondary markets continue to stabilise.
"If the broader market maintains its current levels or trends upward, investor sentiment could improve, encouraging more IPOs. Overall, a stable and positive secondary market is essential for a strong revival in the primary market. If these conditions persist, the outlook appears promising for investors in the coming months," said Ashok Jain, chairman, Arihant Capital Markets.
On the bourses, the BSE Sensex and the Nifty50 have bounced back 12 per cent and 12.6 per cent from their respective April lows, while the broader Nifty MidCap and the Nifty SmallCap indices have recouped 18 per cent and 20 per cent, respectively.
This has had a rub-off effect on the IPO market where mainline offers are beginning to line up after months of dry spell.
Consider this: While the months of January and February 2025 saw 10 mainboard IPOs hitting the Street, March saw nil IPOs, and April saw just one company (Ather Energy) launching its IPO.
A similar trend was observed among companies filing for Sebi's approval for IPOs. Data from PRIME Database suggests that over 25 companies filed draft red herring prospectuses (DRHPs) with Sebi in January. These applications dropped to 13 in February and 10 in March, before rising to 20 in April.
As for May, two mainboard IPOs – Borana Weaves and Belrise Industries – opened for subscription, receiving healthy investor interest.
Borana Weaves IPO, for instance, was subscribed 148.78 times in three days, while Belrise Industries has been subscribed over 6x so far.
Further, four more mainboard IPOs – Aegis Vopak Terminals, Schloss Bangalore, Prostarm Info Systems, and Scoda Tubes – will go public next week.
Analysts said companies that had put their capital raising plans on hold amid worries related to India-Pakistan, began enquiring about market conditions as soon as the ceasefire was announced between the two countries.
"There were tariff uncertainties, war related worries, deferral of capex plans, poor demand, and fallen multiples that prevented companies from aggressively following through on equity raising. With many of these issues now largely behind us we expect primary markets to resume very shortly," said R Venkataraman, managing director, IIFL Capital.
Overall, 68 companies have filed their offer documents with Sebi and await its approval, including Hero Fincorp (₹3,668.13 crore), HDB Financial Services (₹12,500 crore), Dorf-Ketal Chemicals India (₹5,000 crore), WeWork India Management (₹2,500 crore), PhysicsWallah (₹4,600 crore), Tata Capital (₹20,000 crore), and Prestige Hospitality (₹2,700 crore), as per PRIME Database.
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