India dominates global IPO market with record Q1CY23 numbers; Strong IPO pipeline for second half of CY23

India reported the largest number of public issues floated in the first quarter of this year, driven by a large number of small ticket IPOs.

The largest IPO in the first quarter of 2023 was Divgi TorqTransfer Systems which raised $50 million.

India has taken the lead globally in the number of IPOs in Q1 of the current calendar year, according to a recent report by EY. Despite ongoing global uncertainties, the Indian IPO market has shown resilience and growth, with an increase of 33% in the total number of IPOs in Q1CY23 compared to the same period in 2022. Although there has been a decline of 89% in the proceeds raised through the main markets, the SME segment has raised $82 million via 38 IPOs, an increase of 123% in proceeds raised on-year.

The EY report further highlights that the largest IPO in terms of proceeds this year was Divgi TorqTransfer Systems, which raised $50 million. The announcement has not taken into account the Rs 4,300 crore Mankind Pharma IPO which closed on 27 April, Thursday. The report also reveals that around 15 companies have filed their DRHPs in the first quarter of this calendar year, compared to around 10 companies that filed their DRHPs in the last quarter of CY22, indicating a strong pipeline for IPOs in H2CY23 and beyond. These companies come from various sectors such as consumer, pharmaceuticals, technology, and financial services.

Adarsh Ranka, Financial Accounting Advisory Services Leader, partner with an Indian member firm of EY Global, said, “India is a bright spot in the global economic landscape. While the IPO activity has remained subdued, companies are using this period to be better prepared for launching their IPO early next year (pre or post Indian general elections).” Veenit Surana, Partner, EY India, further stated, “The India IPO market has shown resilience and growth in Q1 2023, despite ongoing global uncertainties and relatively smaller issue size. The market’s strength is a testament to the Indian economy’s potential for growth. We expect IPO momentum to increase in the future, with domestic and international investors playing important roles.”

Although some companies withdrew their IPO filings due to market conditions or regulator requirements, the report states that globally, India is positioned first in terms of the number of IPOs in Q1CY23. This is a result of the smaller ticket, SME IPOs, as nearly half a dozen larger companies withdrew their IPO filings due to market conditions or regulatory requirements. The regulator (SEBI) has returned offer documents in the last quarter, requiring the companies to be fully compliant at the time of filing.

While the IPO market has been tepid, the report expects the market to recover and volatile stock activity to stabilize. The strong pipeline for IPOs in the second of the year and beyond indicates a brighter outlook for the Indian IPO market, with both domestic and international investors expected to play important roles.

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First published on: 01-05-2023 at 09:36 IST