In CY24, the Indian markets demonstrated remarkable resilience and strength against the backdrop of weak global macros, high interest rates, and geopolitical uncertainties that kept global markets volatile. Despite these challenges, the Indian IPO market flourished, setting new records and reflecting the country’s economic dynamism.
Over the past year, IPOs spanned a diverse range of sectors, a stark departure from previous years where issuances were limited to select industries. This diversification, as noted by Motilal Oswal, highlights the growing maturity of Indian capital markets and offers investors broader opportunities to engage with the country’s growth narrative.
A Year of Record-Breaking IPOs
CY24 saw the highest-ever fundraising through IPOs, with Rs 1.8 trillion raised across 317 offerings—an all-time high surpassing the previous record of Rs 1.3 trillion in CY21 and far exceeding the Rs 576 billion raised in CY23. Notably, the contribution of IPOs to Indian market capitalization rose to 2.9%, up from 1.4% in CY23, though it still falls short of the highs recorded in CY17 (+3.7%) and CY21 (+3.4%), the report by Motilal Oswal highlights.
Among these IPOs, Hyundai Motor led the way with India’s largest-ever issuance of Rs 278.6 billion in October, surpassing LIC’s Rs 205.6 billion IPO in May 2022. Vodafone Idea also made headlines with the largest-ever follow-on public offering (FPO), raising Rs 180 billion in April.
Shifting Sectoral Representation
The year witnessed a significant shift in sectoral representation, reflecting changes in India’s economy. Automobiles, telecom, retail, capital goods, and e-commerce accounted for 59% of the total issue size from 83 companies—underscoring the rise of consumer-driven growth, digital transformation, and infrastructure development.
Automobiles emerged as a standout performer, with its contribution rising sharply from 4.1% in CY23 to 20.2% in CY24. Telecom also saw remarkable growth, increasing its share from 0.1% in CY23 to 12.8% in CY24, while e-commerce climbed from 1.6% to 8.2%. Conversely, sectors like healthcare and technology experienced significant declines, with healthcare dropping from 16.3% to 5.9% and technology from 9% to 0.7%.
These trends reflect broader economic dynamics. While sectors like e-commerce and telecom have gained prominence amid India’s accelerating digital economy, capital goods and real estate continue to show cyclical fluctuations tied to infrastructure and market cycles.
Key Drivers of Growth
A significant portion of funds raised—43%—was concentrated among just five companies: Hyundai Motor (Rs 278.6 billion), Vodafone Idea (Rs 180 billion), Swiggy (Rs 113.3 billion), NTPC Green (Rs 100 billion), and Vishal Mega Mart (Rs 80 billion). Notably, companies from 23 different sectors participated in the IPO market this year, further underscoring its diversification.
Meanwhile, SME IPOs gained traction, with 236 out of 317 IPOs coming from small and medium enterprises. The capital raised through SME IPOs grew to Rs 92 billion in CY24, up from Rs 49 billion in CY23. However, their contribution to total IPOs fell to 5.3% this year, down from 8.6% in the previous year, reflecting the disproportionate growth of larger players.
Lessons from Fragmented Markets
Despite the successes, the year underscored challenges in market efficiency. For instance, the disjointed representation of sectors in previous years—where BFSI, healthcare, and real estate accounted for 90% of issuances in CY20—highlights the risks of over-reliance on select industries. By contrast, the broader sectoral representation in CY24 signals a healthier and more balanced market.
A Look Ahead
CY24’s blockbuster IPO market not only broke records but also demonstrated the increasing sophistication and resilience of India’s capital markets. As the economy evolves, the shifts in sectoral representation underscore the need for companies and investors to adapt to changing trends.
With the Indian markets poised for further growth in Tier 3 and beyond, the success of CY24 sets the stage for a promising future—one where diverse sectors contribute to a unified narrative of growth, innovation, and opportunity.