The IPO of Hyundai Motor India, which listed in October 2024, witnessed record fundraising at Rs 27,859 crore ($3.3 billion). India’s primary markets have been scaling new heights, and Hyundai Motor India’s IPO was proof of that. But as the economy expands and businesses scale up, the question arises: When will India see its first $10 billion IPO, considered a global benchmark for big companies?
The country witnessed its first billion-dollar IPO in 2004, when information technology major TCS raised Rs 4,713 crore (around $1 billion then). Market watchers believe if companies continue to innovate and expand, India will likely see its first $10 billion IPO sooner than later. Dhiraj Padiyath, Head of Products and Platforms at brokerage firm YES Securities says, “Given the trajectory of India’s capital markets and increasing scale of its leading enterprises, it is possible to anticipate the country’s first $10 billion (Rs 85,000-90,000 crore) IPO within the next three to five years.”
In dollar terms, the IPO of Coal India, which raised Rs 15,199 crore ($3.4 billion) in 2010, is still the biggest at the then exchange rate. The world, however, witnessed the largest IPO ($29.4 billion) in 2019 when Saudi Aramco—the world’s largest integrated oil and gas company—hit the primary market.
Mahavir Lunawat, Group Founder & Managing Director of financial services group Pantomath Financial Services Group, says India’s capital market is experiencing unprecedented growth and emerging as a hub for large IPOs, including by multinational companies. “We could have a $10 billion IPO in the near future, much earlier than one would expect,” he says.
The country witnessed 266 IPOs in five years till 2024 against 123 in the preceding five years (2015-2019), per data provider primedatabase.com. In 2024, 91 firms raised a record Rs 1,59,784 crore through main board IPOs, more than three times the Rs 49,436 crore mobilised by 57 IPOs in 2023.
Meanwhile, retail interest has also increased. The average number of IPO applications from retail participants was 1.88 million in 2024 in comparison to 1.32 million in 2023.
POTENTIAL CANDIDATES
If one shortlists candidates for mega IPOs based on analysts’ recommendations, a few sectors stand out. Some experts, such as Krishna Appala, Senior Research Analyst of Capitalmind Research, believe a $10-billion IPO may come from a tech giant, with Reliance Jio and Reliance Retail leading the race. “Both operate in high-growth, high-capex sectors.”
Neha Agarwal, Managing Director and Head, Equity Capital Markets of JM Financial Institutional Securities, believes that apart from tech, traditional sectors are compelling contenders. As with other tech giants emerging in telecom, e-commerce and digital services, companies can easily command valuations for an issue size of $10 billion based on their user base and innovative business models. Traditional sectors like banking, financial services, insurance and energy have been prominent parts of the country's economy since decades, says Agarwal.
Padiyath of YES Securities concurs with Appala. “India’s inaugural $10 billion IPO is likely to originate from the technology sector, likely from companies such as Reliance Jio and Flipkart,” he says.
WHERE INDIA STANDS
The average daily equity trading turnover exceeds Rs 1 lakh crore ($12 billion), painting a healthy picture of liquidity in the system. Robust SIP inflows (Rs 25,000 crore per month), strong participation from domestic institutional investors and an expanding retail investor base show strong liquidity support.
Padiyath believes India’s capital market has demonstrated considerable resilience in accommodating large IPOs. “The robust participation from both institutional and retail investors in recent offerings indicates sufficient liquidity to support future mega IPOs.”
Agarwal of JM Financial Institutional Securities says market liquidity has shown resilience, with investors continuing to participate in IPOs. Retail investors’ shift fixed deposits to capital markets is also adding significantly to the liquidity.
ROLE OF FOREIGN INVESTORS
Despite robust liquidity, the role of foreign institutional investors, or FIIs, will be crucial. Mega IPOs require deep pockets, and global institutional investors, sovereign wealth funds and pension funds will play a critical role, say analysts. Padiyath says foreign investor participation is crucial. “Such large-scale offerings require substantial capital. FIIs play a pivotal role. Their involvement not only augments the capital base but also enhances credibility and global visibility of the IPO.”
Sharing her views on the role of FIIs, Agarwal says, “The liquidity for big IPOs is largely supported by strong domestic inflows. Foreign investors’ participation is crucial as it increases liquidity, diversifies investor base and leads to competitive pricing and market stability. FIIs bring deep pockets and long-term capital, which are essential for absorbing large issues.”
LIC’s $2.69-billion IPO in 2022 faced challenges due to lower-than-expected FII participation, highlighting the need for foreign capital and favourable market conditions for large offerings. Appala believes a player like LIC, if it goes for a second round of divestment, could be a good candidate for a large primary market offering.
THE NEXT DECADE
Taking a step further, Appala believes that owing to the growth trajectory of Indian corporations and expansion of the economy, India could witness IPOs in the range of $15-20 billion over the next decade.
Padiyath of YES Securities seconds Appala. He says over the next decade, India could witness IPOs exceeding $15 billion, especially from conglomerates or leading technology firms.
Achieving a $10-billion IPO target is not without difficulties. India needs capital market reforms and more ease of doing business to encourage mega IPOs. Agarwal advocates simplifying listing requirements and enhancing corporate governance to make India more attractive for high-value IPOs. Streamlining regulatory approvals, reducing IPO processing time and supportive policies will boost market confidence. Is India ready? If one has to fall back on the age-old adage, where there is a will, there is a way.
@iamrahuloberoi