India IPO Trends Report
EY India IPO trends report is released every quarter and looks at the IPO markets, trends and outlook for the India region. It forms part of our Global IPO trends report.
Key highlights from Q4 2022
- Indian stock exchanges (BSE and NSE including SMEs) ranked third in the world in terms of the number of IPOs in 2022. There were no cross-border deals.
- In the main markets (i.e., BSE and NSE), there were 18 IPOs (including one InvIT) in Q4 2022 versus 24 IPOs in Q4 2021 and four IPOs in Q3 2022. This represents a decrease of 25% compared to Q4 2021 and an increase of 350% compared to Q3 2022.
- As regards to SME markets, there were 34 IPOs in Q4 2022 versus 23 and 33 IPOs in Q4 2021 and Q3 2022, respectively, representing an increase of 48% and 3% respectively as compared to Q4 2021 and Q3 2022.
- Q4 has been the best quarter of 2022 in terms of the number of deals after the relatively muted activity throughout the year. In addition, from an IPO pipeline perspective, over 10 companies have filed their Draft Red Herring Prospectus (DRHPs) in Q4 of 2022 signaling a potentially brighter 2023.
- As per the recent DRHP filings, the most active sectors are consumer products & retail, technology and diversified industrial products.
- As a key development this quarter, SEBI has introduced some significant regulatory changes such as requiring a committee of Independent Directors to recommend that the price band is justified based on quantitative factors, disclosure of all key performance indicators with a three-year look back period and benchmarking with peers, track record of information on the pricing of shares from private equity/investors, enabling confidential IPO filings with the regulator, increased responsibility of audit committee, etc.
Click here to download Q4 2022 report
We saw several IPOs concluding with good post-listing performance. Unlike earlier when capital markets significantly relied on foreign institutional investors, this robust growth pattern will continue because these companies are supported by domestic retail and institutional capital. The investments in domestic mutual funds and vehicles like Alternate Investment Funds are also compelling. A few more quarters like this will hopefully bring back some buoyancy to the market
Q4 2022 witnessed 4x the IPO activity in the previous quarter. While IPO issue proceeds by company are relatively small, with the growing prominence of India as an investment destination 2023 brings brighter outlook for Indian capital markets.
India clearly seems to stand out as one bright spot in the present-day global environment compared to most other larger economies. To optimise the tax and other costs of the entire exercise from the standpoint of the company and all stakeholders, it is always wise to start planning well in advance and set a clear roadmap. This is essential for meeting the desired IPO schedule and ensuring the regulatory compliances without compromising any of the business goals
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