India’s IPO market expected to raise USD 23 bn this year

India is set for a major IPO year, with local firms expected to raise some USD 23 bn in 2025 — up over USD 3 bn from last year’s USD 19.6 bn — despite an economic slowdown and currency pressure, the Financial Times reports, citing Indian brokerage and asset management group Motilal Oswal.

By the numbers: At least seven companies are eyeing offerings exceeding USD 1 bn each, including online brokerage firm Groww, PayPal-backed fintech firm Pine Labs, SoftBank-backed eyewear company Lenskart, and the Indian arm of LG. Smaller debuts are also expected to add to the tally, with 34 companies already approved to raise USD 4.8 bn this year and another 55 in the pipeline that could raise an additional USD 11.4 bn.

A possible debut for Mukesh Ambani’s telecom business could dwarf all comers this year: Reliance Jio, the telecom wing of Mukesh Ambani’s sprawling Reliance Industries conglomerate, could see the country’s largest IPO this year, though no timeline for the potential offering has been confirmed. Investment bankers speaking to the salmon-colored paper said that an offering could take place in 2H 2025.

This year’s high expectations follow a bumper crop in 2024: India topped global rankings for the number of IPOs last year, recording 336 offerings compared to the US’ 240, China’s 96, and Hong Kong’s 70.

Booming domestic investment is driving sentiment: The spate of IPOs comes as Indian corporations’ equity valuations have been driven up by burgeoning domestic investment, particularly as the number of Indians who have accounts that enable them to invest in mutual funds has quadrupled to 180 mn over the last four years. This has made India’s stock market the most expensive in the world, with listed companies’ share price-to-earnings ratio — a measure of how fast a stock’s price increases relative to its earnings potential — clocking in at an average of 20, signaling either an overvalued stock or strong investor confidence in a high growth rate.

Foreign investors, for their part, have balked at the relative expense of the market, withdrawing over USD 30 bn since October alone.

Macroeconomic headwinds are part of the puzzle: The Nifty 100 index of India’s top stocks has dropped 12% since September, with GDP growth slowing to 5.4% y-o-y in 3Q 2024 — its lowest in nearly three years. The INR is under increasing pressure from a strong USD, while consumer spending and credit availability have dropped amid high inflation and an expansion in borrowing from India’s already highly leveraged urban middle class.

The volatility is giving CEOs second thoughts about listing: Leading Indian founders are considering delaying listings in hopes that the market will perk up once again. “I’m already noticing in my one-on-one conversations that many [founders], if not all, are holding back the urgency in which they wanted to launch the IPO — they are happy to delay it by a month or two,” head of institutional equities at Ambit Capital Nitin Bhasin told the FT.

MARKETS THIS MORNING-

Asian markets are mostly in the red in early trading this morning — the Nikkei is down 2.5%, the Hang Seng is down 2.0%, and the Kospi is down 2.8%.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.1% yesterday on turnover of SAR 5.1 bn. The index is up 3.1% YTD.

In the green: Mutakamela (+9.7%), Acig (+8.6%) and Saico (+7.7%).

In the red: Thimar (-7.5%), Amiantit (-5.8%) and Chubb (-4.3%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.5% yesterday on turnover of SAR 36.6 mn. The index is down 1.2% YTD.

In the green: TMC (+29.9%), Multi Business (+10.4%) and Knowledge Net (+6%).

In the red: Meyar (-6.8%), Enma Alrawabi (-6.1%) and Dar Almarkabah (-6%).

CORPORATE ACTIONS-

#1- SEC finalizes SAR 5.7 bn settlement of fuel cost disputes: Saudi Electricity Company (SEC) received approval from the Ministerial Committee for Restructuring the Electricity Sector for a SAR 5.7 bn final settlement of historical fuel cost and energy pricing disputes, according to a disclosure to Tadawul. The arrears — owed to the Ministry of Finance — will be transferred into a Mudaraba instrument within 30 days from 31 January, raising its total value to SAR 173.6 bn.

#2- Smart Incense Trading Company tapped Amwal Financial Company to assess its eligibility for transitioning to the main market, it said in a disclosure to Tadawul. The financial consulting contract also aims to support the company with potential mergers and acquisitions and provide recommendations to the company’s board pertaining to the timing and eligibility of the transition. No timeline or investment ticket was disclosed.

#3- Buruj Ins. appointed Shariyah Review Bureau for Sharia compliance: Buruj Ins. tapped the Shariyah Review Bureau to review and ensure its operations adhere to AAOIFI Sharia standards, with a Sharia Supervisory Committee overseeing compliance and audits, it said in a filing to the exchange.