Indian IPOs report a robust year in 2023 as numbers pick up

Macro picture of IPOs in 2023

The year 2023 is just about to conclude and we have the details of the key IPOs on the main board. The IPO story may not have been as attractive as it was in 2021 in terms of size of fund raising. However, it was more than compensated by the number of IPOs and the returns generated by these. Here is a macro picture of mainboard IPOs in India in the year 2023. We have taken IPO listings in 2023 as the benchmark for our calculations.

1. There was a total of 60 mainboard IPOs in the year. Out of these 60 IPOs, only 9 IPOs came out in the first half of the year while the remaining 51 IPOs came out in the second half of the year. The most concentrated quarter in terms of number of IPOs was the fourth quarter of 2023 at 28 IPOs followed by 23 IPOs in the third quarter.
    
2. IPOs raised just about Rs1,021 quarter in the first quarter and Rs9,064 crore in the second quarter. The third quarter saw IPO fund raising of Rs16,580 crore while the fourth quarter saw fund raising of Rs26,425 crore. Overall, for the full year 2023, total IPO fund raising was to the tune of Rs53,091 crore.
    
3. Against the total intended IPO collections of Rs53,091 crore, the total actual subscription received was to the tune of Rs19,64,831 crore. That indicates that IPO as an asset class got 37.01 times subscribed on a weighted average basis.
    
4. Let us turn to the market value creation by the IPOs in 2023. The total funds of Rs53,091 crore collected via IPOs had a closing market cap of Rs83,328 crore. That implies an annual return of 56.95%, positioning IPOs as a lucrative asset class for Indian investors.
    
5. In rupee terms, this translates into market value addition by IPOs to the tune of Rs30,237 crore. Out of the 60 IPOs in 2023, the top 10 IPOs by value creation accounted for nearly 70% of the total value creation by all IPOs in the year.

To sum it up, it has been a robust year in terms of the number of IPOs and the performance of the IPOs. Let us now turn to some interesting rankings.

Best IPOs in 2023 in terms of returns generated

Here we look at the top 20 IPOs in terms of the best returns generated. Returns are just absolute returns of market price over the issue. The time period of post listing returns is not considered, nor it is annualized to avoid the bias. Here is the ranking.

Data Source: NSE / BSE

The table above lists the 20 best IPOs in 2023 in terms of percentage returns. This is irrespective of the time period post listing. Here are some key takeaways.

• Out of the 60 IPOs in 2023, a total of 56 IPOs generated positive returns and only 4 IPOs gave negative returns, which is a very good strike rate of more than 90%. The median IPO returns stand at around 32.12% for the full year, which is more reflective.
   
• Out of the 60 IPOs in the year 2023, a total of 9 IPOs more than doubled over the listing price with IREDA being the only IPO to have tripled over the issue price. A total of 23 companies yielded returns of more than 50% while a total of 31 IPOs generated more than 30% returns since listing. A total of 49 IPOs or more than 80% of the IPOs generated double digit returns or higher.
   
• The top 20 companies with the highest returns accounted for over 40% of the funds raised in 2023 while the top 40 companies by returns accounted for over 80% of the IPO funds raised. It means that the companies that have raised the bulk of the fund  have also delivered results for the investors.

Overall, the return story is quite attractive for the year. Let us now turn to look at the subscription story for the year.

Best IPOs in 2023 in terms of subscription times

Here we look at the top 20 IPOs in terms of the best subscription received. We don’t go by the size of the issue but just look at the oversubscription ratio. This could be biased in favour of the smaller companies, but that is something we live with.

Data Source: BSE / NSE

The table above lists the 20 best IPOs in 2023 in terms of subscription times. This is irrespective of the size of the IPO. Here are some key takeaways.

• Out of the 60 IPOs in 2023, only 1 IPO had to cancelled and only 1 IPO got overall undersubscribed. a total of 4 IPOs got subscribed more than 100 times, while a total of 24 IPOs got subscribed more than 50 times. In fact, 46 out of the 60 IPOs managed to get at least double digit subscription levels.
   
• The top 20 companies with the highest subscription accounted for over 25% of the funds raised in 2023 while the top 40 companies by returns accounted for over 60% of the IPO funds raised. It means that the companies that have raised the bulk of the fund have also got substantial oversubscription.

Overall, the subscription story is quite attractive for the year. As we mentioned earlier, the IPOs as an asset class in 2023 got oversubscribed 37 times, and that says a lot.

Did subscription levels impact returns?

To an extent, yes. The top 20 companies in terms of subscription have also give positive returns in 2023. However, if you look at the bottom five in terms of subscription, then there are 50% of the negative return companies in the year. However, if you look at the 13 companies with single-digit subscription levels, then there are 6 companies giving more than 30% returns. So, low subscription is not the end of the story. That may be the good news from the IPO story of 2023.