India’s IPO market is booming, with companies raising $8.6 billion in 2024, surpassing the totals from the previous two years and capturing 25 percent of the global IPO market. This surge, driven by strong investor confidence, high liquidity, and a resilient economy, positions India as a standout performer amid a global IPO downturn.
An Initial Public Offering (IPO) is the process by which a private company offers its shares to the public for the first time, allowing it to raise capital and become publicly traded.
Current IPO Scenario
In 2024, 61 IPOs were listed on the stock market. Of these, 50 delivered listing gains, 6 listed at a discount, and the rest listed flat. On average, IPOs provided returns of 30.1 percent on their listing day.
The top-performing IPO generated returns of 411 percent above its issue price, while the biggest loss was 31 percent. Additionally, 14 IPOs achieved returns exceeding 200 percent.
Here are three stocks that have benefited from past IPOs and are expected to gain from future IPOs:
KFin Technologies Limited
KFin Technologies Ltd plays a crucial role in facilitating IPO listings by providing comprehensive technology-driven services to asset managers and corporate issuers, ensuring efficient transaction processing and record-keeping.
In 2024, KFIN served as the registrar for 37 out of 61 IPOs listed this year, which is over 60 percent of the total IPOs, indicating a strong preference among companies for KFIN’s services. It facilitated listing of the highly profitable IPOs such as Premier Energies, Bajaj Housing Finance and many more.
KFin Technologies manages 137 million investor folios and serves 6,319 corporate clients. With a significant market share of 46.4 percent, KFin Tech stands out as a leading player in the industry.
With a market capitalization of Rs.17,976 crores, KFin Technologies Ltd.’s share price closed at Rs.1,082 on Friday, rising 7.12 percent from its previous close.
Turning to the company’s financials, for Q1FY25, revenue grew by 31 percent year-on-year to Rs.238 crore, while net profit increased by 58 percent to Rs.68 crore.
Central Depository Services Limited (CDSL)
Central Depository Services Limited (CDSL) is integral to the capital market structure, serving exchanges, clearing corporations, depository participants, issuers, and investors. It facilitates the holding of securities in dematerialized form and supports securities transactions.
As of June 2024, CDSL holds a 77 percent market share in demat accounts and is the only depository securities company listed on the stock exchange. Recent reports show CDSL managing over 5.85 crore active demat accounts, highlighting its extensive reach and capacity.
During IPOs, CDSL collaborates with stakeholders like merchant bankers and registrars to meet regulatory requirements and ensure prompt crediting of shares to investors’ demat accounts.
With a market capitalization of Rs.31,437 crores, CDSL’s share price closed at Rs.1,536.00 on Friday, rising 1.65 percent from its previous close.
Diving into the company’s financial performance, in Q1FY25, CDSL’s revenue was Rs.257 crore, up 71.33 percent year-on-year, while net profit increased 81.08 percent to Rs.134 crore.
Bombay Stock Exchange Limited (BSE)
BSE Ltd provides a platform for companies to list their shares through IPOs. BSE operates under regulations set by the Securities and Exchange Board of India (SEBI), ensuring that all IPO processes are transparent and adhere to legal standards.
BSE and NSE have different IPO listing fees. BSE charges an initial fee of Rs.25,000, a processing fee of Rs.50,000, and bid verification costs of 0.01 percent of the issue size (minimum Rs.25,000).
NSE has a higher initial fee of Rs.50,000 but a lower processing fee of Rs.25,000. Both exchanges require a refundable deposit of 1 percent of the issue size and impose annual listing fees based on market capitalization or paid-up capital. Overall, BSE’s fees are typically higher, particularly for processing and bid verification but not for initial listing.
As of now, 57 IPOs have been listed on BSE in 2024, raising approximately Rs.62,675 crores. The BSE IPO index has delivered 348 percent absolute gains, significantly outperforming the benchmark BSE 500 index’s 165 percent gain, thanks to strong listing gains.
With a market capitalization of Rs.52,745 crores, BSE share price closed at Rs.3,957.85 on Friday, rising 6.65 percent from its previous close.
Diving into the company’s financial performance, in Q1FY25, BSE’s revenue was Rs.671 crore, up 158 percent year-on-year, while net profit decreased by 40 percent to Rs.264 crore.
IPO future outlook
In the first half of 2024, India captured 25 percent of global IPO volumes and now leads the world with over 5,450 mainboard listed companies. India’s IPO market is booming, with companies raising $8.6 billion in 2024. This growth, driven by strong investor confidence and a robust economy, includes upcoming major listings from Swiggy and LG India.
Additionally, these stocks are anticipated to benefit from upcoming IPOs and the performance of previously listed ones, though outcomes may be influenced by regulatory changes, government policies, and external factors.
Written by – Siddesh S Raskar
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