MUMBAI: The initial public offering (IPO) market of the country has seen a slowdown in subscriptions over the past two months, driven by weak market sentiment and disappointing listing performances, says a report by Axis Capital.
The report highlighted that the investors appear to be exercising caution, reflecting a shift in confidence toward new market entrants. It said, “A mix of disappointing IPO listing and a sharp decline in market sentiments has resulted in reduction in IPO subscription in last 2 months”.
The report stated that during the current financial year (FY2024), 54 IPOs have been listed, of which 38 are trading above their issue price, suggesting a mixed performance. It added that the historical data from July 2020 to November 2024 provides a broader view, out of 252 IPOs launched during this period, 186 were initially listed above their issue price, 10 at their issue price, and 67 below it.
However, 31 of the underperforming IPOs have since recovered and are now trading above their issue price as of November 29, 2024. As of November 29, a total of 185 IPOs are currently trading above their issue price, reinforcing that many listings remain resilient despite recent market challenges.
However, the market capitalization of companies tracked in the IPO Monitor — comprising 237 companies listed between July 2020 and October 2024 — has seen a decline of 2.71 per cent in November 2024. The total market cap fell from Rs 39.72 lakh crore in October to Rs 38.68 lakh crore in November.
“From July 2020 through November 2024: Out of 252 IPOs, 186 were listed above their issue price, 10 at issue price, 67 below issue price initially, and 31 recovered to close above issue price by November 29, 2024”, the report said.
The decline reflected broader market challenges, with subdued investor sentiment impacting valuations. This trend has dampened enthusiasm for new IPOs, as investors have become more selective about where to allocate funds. The underwhelming listings and subsequent corrections highlight the importance of strong fundamentals and market timing for companies entering the market.
The IPO of Bajaj Housing Finance Limited (BHFL) was subscribed to as many as 67 times, while Hyundai Motor IPO saw a muted response from retail investors as the issue was subscribed 2.37 times only, and recently the NTPC Green IPO also received a muted response as the shares list at 3.24 per cent premium over the IPO price.
While the long-term performance of IPOs remains promising for many, the recent slowdown underlines the importance of stabilizing market conditions to restore investor confidence. However, a rebound in market sentiment, coupled with better-performing listings, could reinvigorate the IPO landscape in the coming months. (ANI)