A total of 37 Indian companies raised Rs 52,116 crore through mainboard IPOs in the financial year 2022-23, less than half of the Rs 1,11,547 crore (all-time high) mobilised by 53 IPOs in 2021-22, according to data from PRIME Database. Overall public equity fundraising also dropped 56 per cent to Rs 76,076 crore, from Rs 1,73,728 crore in 2021-22.
Pranav Haldea, managing director of PRIME Database Group, said Rs 20,557 crore or a huge 39 per cent of the amount raised in 2022-23 was by LIC alone, without which the IPO fundraising would have been just Rs 31,559 crore. To be sure though, the amount raised in 2022-23 is still the third-highest ever in terms of IPO fundraise.
Main Board IPOs
The largest IPO in 2022-23, which was also the largest Indian IPO ever, was from Life Insurance Corporation of India. This was followed by Delhivery (Rs 5,235 crore) and Global Health (Rs 2,206 crore). The average deal size was a high Rs 1,409 crore.
According to Haldea, as many as 25 out of the 37 IPOs came in just three months of the year (May, November and December), which shows the volatile conditions prevalent through most of the year which are not conducive for IPO activity. In fact, the fourth quarter of 2022-23 has seen the lowest amount being raised in the last 9 years.
Only 2 out of the 37 IPOs (Delhivery & Tracxn) were from a new age technology company (NATC) (in comparison to 5 NATC IPOs raising in ₹41,733 crore in 2021-22) pointing towards the slowdown in IPOs from this sector.
The overall response from the public, according to primedatabase.com, was moderate. Of the 36 IPOs for which data is available presently, 11 IPOs received a mega response of more than 10 times (of which 2 IPOs more than 50 times) while 7 IPOs were oversubscribed by more than 3 times. The balance 18 IPOs were oversubscribed between 1 and 3 times. The new HNI segment (Rs 2-Rs 10 lakh) saw an encouraging response with 11 IPOs receiving a response of more than 10 times from this segment.
In comparison to 2021-22, the response of retail investors also moderated. The average number of applications from retail dropped to just 5.64 lakh, in comparison to 13.32 lakh in 2021-22 and 12.73 lakh in 2020-21. The highest number of applications from retail were received by LIC (32.76 lakhs) followed by Harsha Engineers (23.86 lakhs) and Campus Activewear (17.27 lakhs).
The amount of shares applied for by retail by value (Rs 41,671 crore) was 20 per cent lower than the total IPO mobilisation (in comparison to being 17 per cent higher in 2021-22) showing the lower level of enthusiasm from retail during the period. The total allocation to retail, however, was Rs 14,308 crore which was 28 per cent of the total IPO mobilisation (up from 20 per cent in 2021-22).
According to Haldea, IPO response was further muted by moderate listing performance. Average listing gain (based on closing price on listing date) fell to 9.74 per cent, in comparison to 32.59 per cent in 2021-22 and 35.68 per cent in 2020-21. Of the 36$ IPOs which have got listed thus far, 16 gave a return of over 10 per cent. DCX Systems gave a stupendous return of 49 per cent followed Harsha Engineers (47 per cent) and Electronics Mart (43 per cent). 21 of the 36 IPOs are trading above the issue price (closing price of 24th March, 2023).
Outlook For FY2023-24
The pipeline still remains strong. A total of 54 companies proposing to raise a huge Rs 76,189 crore are presently holding SEBI approval. Another 19 companies looking to raise about Rs 32,940 crore are awaiting SEBI approval (Out of these 73 companies, four are NATCs which are looking to raise roughly Rs 8,100 crore).
Haldea said that with weakness still prevailing in the secondary market, because of a combination of domestic and foreign factors, IPO activity is likely to remain muted for the first couple of quarters. We may see some smaller sized IPOs. However, it will be a while before we see larger sized deals, especially in light of lack of sustained interest from FPIs.
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