IPO activity in India is set to remain strong this year after the number of listings rose more than 65% in 2023.

The expected boom comes as companies look to take advantage of the country's robust economic growth, young population and the government's increased focus on digitization.

In total, 243 companies listed on Indian bourses in the year ended Dec. 31, 2023, the highest annual tally in at least six years, according to S&P Global Market Intelligence data. The aggregate transaction value of the IPOs in 2023, however, fell more than 9% to $7.10 billion, dragged down by the absence of big-ticket listings such as Life Insurance Corp. of India, through which the Indian government raised more than 205 billion Indian rupees in 2022 alone.

"I believe India IPO equity will remain strong in 2024," said Raghu Narain, head of investment banking for Asia-Pacific at Natixis CIB. "India is one of the unique countries at the moment where investors can find sustainable growth, so the IPO market reflects that trend."

India is one of the fastest-growing economies in the world, backed by robust domestic consumption, high public capital expenditure, an upturn in private investment and strong exports of services. Its economy is set to grow 7.3% in the financial year ending March 31, government data showed, topping 7% GDP growth for the third straight year. The Reserve Bank of India expects the momentum to continue in 2024, with GDP growth for 2024-25 projected at 7%.

India's economy is in a "Goldilocks zone, offering a superior risk/return reward ratio," Narain said, adding that strong economic growth, young demographics that underpin consumer demand and government impetus on the digitalization of economy and infrastructure are underpinning the development of good companies in India ready for IPOs.

S&P Global Ratings anticipates solid consumer and investment dynamics will propel India's real GDP growth to 6.4% in fiscal 2024, 6.4% in fiscal 2025 and 6.9% in fiscal 2026. The NIFTY 50, which represents the weighted average of 50 of the largest Indian companies listed on the National Stock Exchange, rose 19.4% from Jan. 2, 2023, through Dec. 29, 2023.

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Bucking the trend

India stood out as one of the few bright spots for IPOs in 2023 as activity slowed in other major markets across the globe. The number of IPOs globally fell 15.8% to 1,429 in 2023, and the aggregate transaction value was down a sharp 33.6%.

India took the third spot among global markets in terms of IPO proceeds in 2023, reflecting a shift in the sources of capital and maturing local markets, according to a PwC report released in January. The professional services firm said India's National Stock Exchange (NSE) surpassed Hong Kong in terms of market capitalization in November 2023, reaching nearly $4 trillion.

Natixis CIB's Narain expects both small and large companies in India to tap the capital markets markets, though mega IPOs will be limited. Potential mega deals could come from the technology and financial services sectors, he added.

In 2023, India's industrials sector led IPO activity in the country, followed by the consumer and technology, media and telecommunications sectors. Narain said technology, healthcare, industrial technology and consumer sectors are all ripe for deal-making in 2024.

Upcoming IPOs

A few large companies in India have already announced plans to list their shares this year. Electric vehicle-maker Ola Electric Mobility Ltd. is planning to raise 55 billion rupees in an IPO, targeting a valuation of around $8 billion, Reuters reported Jan. 19, citing IFR. Brainbees Solutions Ltd., which operates e-commerce platform FirstCry, and One MobiKwik Systems Ltd. have also filed to go public, with the latter seeking to raise up to 7 billion Indian rupees in its IPO.

Juniper Hotels Ltd. is set to open its IPO for subscription in the week of Feb. 19, seeking to raise 18 billion rupees in an offering that comprises a fresh issue, with no offer-for-sale component.