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The country’s Initial Public Offering (IPO) scene has experienced significant activity over the past few years, marked by a high number of companies going public. The trend seems to be driven by favorable market conditions, conducive regulations, and a growing investor appetite.
India is seeing a surge in different ecosystems as it braces for an era of unprecedented growth. A report published by Redseer in collaboration with HSBC called ‘India’s Evolving Tech Fundraising Market’ reveals a projection that the total market cap of listed new-age stocks in India is poised to reach a valuation of USD 1 Trillion by 2033. Although ambitious, the forecast reveals the significant impact made by the new-age Indian tech businesses.
The IPO Boom
“The Indian tech landscape, historically overshadowed by global giants, is now carving out its niche in the global market. This monumental growth signifies more than mere numbers; it’s a testament to the maturing Indian internet economy and its burgeoning global relevance,” said Kanishka Mohan, Author of the report and Partner at Redseer Strategy Consultants.
According to the report, the publicly listed new-age companies, comprised of internet retail, fintech, SaaS, and other sectors, are set to escalate their market cap tenfold over the next decade.
The report compares the Indian tech market with the US where tech firms famously acronymed FAANG+M have already crossed the valuation of USD 10 Trillion in valuation, while the Indian collective counterpart appears to be in its infancy. Leading consumer-focused tech startups namely Zomato, Nykaa and Paytm only make up a total of 1% of the market cap. While the numbers seem to be small comparatively speaking, it highlights the immense growth potential.
The Indian stock market is on its bullish run, with indices like BSE Sensex and Nifty hitting record highs. With a streamlined and transparent IPO process, the Securities and Exchange Board of India (SEBI), the country’s market regulator, has played a crucial role in facilitating this IPO boom. Payment options such as UPI and most importantly the reduction in time taken to list shares post-IPO has made the investor process more approachable.
The report predicts over 250 listings from tech-first companies between the period of 2024-33. “These listings are expected to be dominated by consumption-driven goods, fintech, and SaaS. The surge reflects a broader shift in market dynamics and investor confidence in Indian tech startups,” opined Kanishka.
As of 5th July 2024, India has seen a total of 162 companies announce IPOs in 2024 and are comprised of tech-based firms as well as industrial and SMEs. The Redseer report also predicts that only 1 in 3 listings succeed in the first attempt and a significant trend toward profitability has boosted investor sentiment towards IPOs.
Cumulative losses, especially in the tech industry have also reduced, indicating a healthier foundation for listings in the future. However, challenges in achieving and maintaining profitability might play a crucial factor.
“With a projected market cap of $1 trillion by 2033 and a flurry of anticipated IPOs, the sector is gearing up for a period of significant growth. However, this journey will require overcoming substantial challenges and adapting to an ever-evolving market landscape,” concluded Kanishka.
India’s IPO market is experiencing a golden period, driven by favorable market conditions, regulatory support, and a diverse set of companies seeking public funding. As the economy continues to grow and evolve, the trend of companies going public is expected to remain strong, contributing to the overall development and dynamism of the Indian financial markets.
