The initial public offering (IPO) market in Mumbai is witnessing an unprecedented bull wave, with several IPOs being fully subscribed within hours of opening. Three out of four IPOs – Tata Technologies, Flair Writing Industries, and Gandhar Oil Refinery – opened on Wednesday and were quickly subscribed. The Indian Renewable Energy Development Agency (IREDA) public offer, which opened a day earlier, has already been subscribed five times. Only the Fedbank Financial Services IPO saw a comparatively muted start but is also expected to sail through.
The enthusiasm among investors can be seen in the high subscription levels of these IPOs. The highly anticipated Tata Technologies IPO, the first from the Tata Group in two decades, was fully subscribed within 40 minutes of opening on Wednesday. The issue has already been subscribed 6.5 times, with the high net-worth and retail categories subscribing 11.6 times and 5.3 times, respectively.
The grey market premium of Tata Technologies also indicates the potential for better listing gains. Institutional investors, who mostly subscribe on the last day, submitted bids four times the shares reserved for them. The grey market premium for Tata Technologies is ₹360 apiece over the upper end of the issue price band of ₹500 per share.
The IPO euphoria can be attributed to various factors. Retail investors are gaining profits in recent IPOs, and the listings have seen substantial premiums. Out of the 44 IPOs listed in 2023, about 21 have yielded returns ranging from 22% to 93% on the day of listing. The primary market has not seen five IPOs in a week in recent times.
The IPO market is also benefiting from the significant liquidity in domestic institutions. Mutual funds are receiving substantial inflows, and equity mutual fund schemes witnessed a 42% rise in net flows in October. Retail investors’ inflows into mutual funds, particularly mid and small-cap schemes, are contributing to the IPO market.
Subdued conditions in the secondary market, along with significant liquidity as investors hold onto cash in anticipation of a market decline, may be driving the demand for public issues. The judicious pricing of IPOs is also attracting strong demand from a diverse group of investors, safeguarding against fluctuations in the secondary market.
Overall, the IPO market in Mumbai is experiencing a bull wave with high subscription levels and enthusiasm among investors. Increased investor appetite, liquidity from retail investors, and judicious pricing are driving the demand for public offerings.
