IPO Update: 41 Companies File for IPO, 15 in Just One Day!

Understanding IPOs

IPO Update: An Initial Public Offering (IPO) is a defining event for private companies as it allows them to transform into public entities while offering shares to investors. Through this process, companies can raise funds for various objectives, including:

• Expansion: An IPO can mobilize growth funds, allowing a business to expand geographically or introduce new products.
• Debt Payback: Businesses use the money to pay off outstanding debts, improving the balance sheet and the overall financial situation.
• Profile and Prestige: The IPO enhances the company’s profile and status, making it more attractive to customers and employees.

Stages of the IPO Process:

The IPO process involves several stages:

1. Pre-IPO Preparation: Businesses prepare their financial statements and documents, such as a prospectus, which details the business model, financial health, and associated risks.
2. SEBI or SEC Regulatory Approval: The prospectus must be filed with the Securities and Exchange Board of India (SEBI) for Indian companies or the Securities and Exchange Commission (SEC) for U.S. companies, ensuring legal compliance.
3. Underwriting: Companies generally hire investment banks to underwrite their IPOs. The investment banks determine the offer price, purchase shares from the firm, and sell them to investors.
4. Marketing: Several weeks before the IPO, companies launch a “roadshow” to attract potential investors by presenting their business case and addressing questions.
5. Pricing and Launch: On the IPO date, the firm sets a price based on demand, and the stock begins trading on exchanges.

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The Current IPO Rush

The Indian IPO market in September 2024 set a new record, with 41 companies filing their Draft Red Herring Prospectus (DRHP) documents during the month. This is the highest number of filings in a single month since record-keeping began. Notably, 15 filings occurred on a single day, September 30, reflecting an intense rush to raise capital before unfavorable market conditions could set in.

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Drivers of the Boom

Several factors are fueling the surge in IPO filings:

• High Liquidity: There is a significant inflow of domestic investors, especially retail investors. Mutual fund inflows have doubled compared to the previous quarter, providing ample liquidity for supporting new issues.
• Regulatory Favor: SEBI has simplified the IPO sanctioning process, allowing companies to push forward with their plans more quickly.
• End of Financial Validity: Audited financials for the quarter ending March 31 remain valid only until September 30, prompting many companies to file before the deadline.

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Record-Breaking Filings

By the end of September 2024, 120 companies had filed DRHPs, exceeding the 112 filings seen during the same period last year. In 2021, a total of 126 filings were made, and this year may set new records. The previous record for DRHP filings in a single month was set in September 2010 with 34 filings. The surge in filings on September 30, 2024, highlights the urgency of companies seeking to capitalize on the favorable market conditions.

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Notable Filings

Some prominent companies that filed for IPOs on September 30 include:

• Sambhv Steel Tubes
• Jaro Institute of Technology
• Viney Corporation
• Scoda Tubes
• Dev Accelerator
• Globe Civil Projects
• Ajax Engineering
• Rahee Infratech
• VMS TMT
• Prostarm Info Systems
• All Time Plastics
• Vikran Engineering
• Varindera Constructions
• Aditya Infotech

The total capital raised by these companies indicates strong investor confidence in their growth potential.

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Upcoming Major IPOs

Several high-profile IPOs are expected in October and November 2024, which are eagerly awaited by investors:

Swiggy

• Expected Issuance: November 2024
• Target Amount: Approximately ₹11,000 crore
• Details: Despite reporting a loss for FY 2024 due to high operational costs, Swiggy’s 45% revenue growth highlights rising demand for food delivery services.

NTPC Green Energy

• Expected Issuance: Early November 2024
• Target Size: ₹10,000 crore
• Details: This IPO will help fund NTPC’s renewable energy ventures, including solar energy production and green hydrogen initiatives.

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Hyundai Motor India

• Issue Date: October 14-16, 2024
• Amount Raised: Up to ₹25,000 crore
• Details: This could become India’s largest IPO if successful. The funds will be used to expand operational capacity and accelerate electric vehicle production.

Afcons Infrastructure

• Tentative Issue Date: Early October 2024
• Issue Size: Up to ₹8,400 crore
• Details: The capital raised will be used to repay debt and invest in future infrastructure projects.

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Waaree Energies

• Expected Issue Date: October 2024
• Offer Size: ₹3,000 crore
• Details: As India’s largest solar PV module manufacturer, Waaree Energies will use the funds to expand its operations and capitalize on the country’s push toward renewable energy.

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Market Perspective

The surge in IPO filings reflects a positive outlook among Indian corporations, buoyed by strong demand from investors. The record-breaking filings in September, particularly the 1.314 million shares issued on September 30, underscore the urgency of firms seizing market opportunities while conditions remain favorable. Experts attribute the trend to sustained domestic liquidity and improved foreign inflows.

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Conclusion

The upcoming IPOs of Swiggy, NTPC Green Energy, Hyundai Motor India, Afcons Infrastructure, and Waaree Energies in October and November 2024 will play a significant role in shaping the Indian capital markets. These offerings not only represent individual company growth but also highlight broader trends in the evolving Indian economy. Investors should be attentive, as these developments could present exciting opportunities in some of India’s most promising sectors.