India's initial public offering (IPO) market has demonstrated robust growth, with total fundraising reaching an impressive ₹1.71 lakh crore. This marks a significant 7% year-on-year increase, highlighting the continued strength and attractiveness of the Indian capital markets.

Key Highlights

• Total IPO fundraising: ₹1.71 lakh crore
• Year-on-year growth: 7%
• Offer-for-sale transactions: 63% of total fundraising
• Fresh capital raised: Remained static

Dominance of Offer-for-Sale Transactions

A notable trend in the recent IPO landscape is the dominance of offer-for-sale (OFS) transactions, which accounted for a substantial 63% of the total funds raised. This indicates a strong preference among existing shareholders to monetize their holdings through public offerings.

Fresh Capital Remains Steady

While the overall IPO market showed growth, the amount of fresh capital raised remained static compared to the previous year. This suggests that companies were less inclined to issue new shares for capital expansion or debt reduction purposes.

Market Implications

The significant increase in IPO fundraising, despite static fresh capital issuance, points to a robust secondary market and strong investor appetite for Indian equities. The dominance of OFS transactions also indicates that existing investors, including private equity firms and promoters, are finding favorable conditions to exit or partially divest their holdings.

Market Outlook

The impressive performance of India's IPO market reinforces the country's position as an attractive destination for both domestic and international investors. As the Indian economy continues to grow and mature, the capital markets are likely to play an increasingly important role in funding business expansion and providing exit opportunities for early-stage investors.

Investors and market participants should closely monitor upcoming IPOs and the overall market sentiment to identify potential investment opportunities in this dynamic landscape.

India's IPO market concluded 2024 with strong fundraising momentum, raising ₹1.71 lakh crore compared to ₹1.59 lakh crore in the previous year, marking a 7% increase according to NSE data. The market benefited from record retail and domestic institutional participation throughout the year, though the composition of fundraising revealed significant trends toward investor exits rather than fresh capital infusion.

OFS Transactions Drive Market Activity

The most notable trend in 2024's IPO landscape was the dominance of offer-for-sale (OFS) transactions by existing investors and promoters. These secondary sales increased 13% to ₹1.07 lakh crore from ₹95,217 crore in the previous year, representing 63% of total fundraising.

Major OFS Transactions Shape Market

Several large-scale OFS transactions dominated the year's fundraising activity. Tata Capital led with the year's biggest IPO, raising ₹15,512 crore entirely through OFS by parent company Tata Motors. HDB Financial Services followed with a ₹12,500 crore OFS by promoter HDFC Bank.

While some large OFS transactions were required to meet regulatory compliance, the majority facilitated exits for early investors, including venture capital and private equity firms.

Market Implications and Expert Analysis

Narinder Wadhwa, Managing Director & CEO of SKI Capital, noted that while OFS-led issues improve free float and liquidity, their growing dominance suggests market valuations may be approaching a cyclical peak. He observed that informed insiders typically divest when pricing conditions are most favorable, a pattern historically associated with late-stage bull markets characterized by abundant liquidity and strong retail participation.

The relatively lower share of fresh issue proceeds dilutes the broader objective of IPOs as funding tools for expansion, capital expenditure, and balance sheet strengthening, according to Wadhwa's analysis.

Investment Considerations and Future Outlook

Vinit Bolinjkar, Head of Research at Ventura, emphasized that while providing exits for early investors indicates market maturity, retail investors often purchase stakes at peak valuations without fresh growth capital entering businesses. He stressed the importance of enhanced due diligence when OFS dominates IPO structures, cautioning investors against funding exits at inflated prices.

Looking ahead, Wadhwa recommended that retail participants shift focus from short-term listing gains toward comprehensive assessment of proceeds utilization, promoter commitment post-IPO, and valuation comfort. Industry estimates suggest IPO fundraising could range between ₹1.8 lakh crore and ₹2.5 lakh crore in the following year, with high OFS shares potentially continuing as valuations moderate and promoters seek to realize gains.