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Indias equity issuance market is expected to remain buoyant in the coming months as several large initial public offerings (IPOs) are lined up, which could sustain fundraising momentum and support higher corporate capital expenditure, according to a Bank of Baroda (BoB) research report.
The outlook comes after equity issuances touched a five-year high of Rs 2.36 lakh crore in the first five months of FY27, nearly three times the Rs 0.80 lakh crore raised during the corresponding period of FY23. Highlighting the outlook, the report said, The coming months will be witnessing some large IPOs which will add to the buoyancy in the market. It further said, This would also lead to higher capex by companies to the extent that they utilize these proceeds for this purpose. The report said optimism in the capital market remained strong despite uncertainty and volatility in the global environment, with the pipeline of large IPOs indicating healthy investor appetite. Several large IPOs are currently in the pipeline, including the public issue of the National Stock Exchange (NSE), which opened for subscription on Thursday, and Hero Motors. The market is also expected to see IPOs from Jio, boAt, OYO, Parle, Zepto, MakeMyTrip, PhonePe and Cult.fit, among others. According to the report, total equity issuances stood at Rs 2.36 lakh crore in the first five months of FY27, the highest during the comparable period in the past five years. Of this, Rs 70,540 crore was raised through Offer for Sale (OFS), while fresh issuances amounted to Rs 1.65 lakh crore. There has hence been a lot of buoyancy on the equity issuances over the last 5 years or so with the quantum increasing from Rs 0.80 lkh crore in FY23 to Rs 2.36 lkh crore in FY27, the report said. Of the fresh issuances, private placements accounted for 80 per cent, while public issues and rights issues together accounted for the remaining 20 per cent. Within OFS issuances, 38 per cent came into the public domain. Overall, around Rs 0.60 lakh crore, or 25 per cent of total issuances, was raised through public offerings. The strong fundraising activity came despite global uncertainty and supply-chain disruptions. The report noted that companies continued with their fundraising plans and remained positive about the growth prospects of the economy. It also pointed to supportive secondary market conditions, with the Nifty rising 7.8 per cent between March and August, compared with 3.9 per cent during the corresponding period last year. The record amount raised in the first five months of FY27 came from fewer companies than in the previous two years. A total of 377 companies raised equity during the period, compared with 491 in FY26 and 613 in FY25, indicating a shift towards larger issue sizes. The report also linked fresh equity issuances with future investment. It noted that while proceeds can also be used for loan repayment, working capital or repatriation, the dominance of private-sector companies in fresh issuances is indicative of higher future investment. Financial services accounted for the largest share of equity issuances in the first five months of FY27 at 53 per cent, followed by manufacturing at 18.1 per cent and non-financial services at 16.8 per cent, according to the report. (ANI)
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