IPO frenzy cools down in November as subscription levels take a hit

Demand in the primary market remained largely subdued in the month of November as average subscription levels, both in the mainboard and SME IPO segments, witnessed a significant decline when compared from the earlier months.

Data from Prime Database shows that the average subscription level for mainboard IPOs in November fell to 1.9 times, a sharp decline from 16 times in October and 76 times in September.

Incidentally, the IPO of Enviro Infra Engineers, which was subscribed 221 times, was excluded from the calculation to avoid skewing the data as excluding Enviro, all the IPOs that were launched in November saw subscription levels in a modest range of 1.5 times to 2.4 times.

In November, while seven companies went public, the larger ones were Swiggy with an issue size of Rs 11,327 crore and the Rs 10,000-crore NTPC Green Energy IPO.

"Over the last month, markets have seen volatility because of geopolitical concerns and persistent FII selling that has dampened the sentiment thereby affecting primary markets too which saw lower subscriptions lately," said Prashant Rao, director of equity capital markets at Anand Rathi Investment Banking. He added that even though the euphoria has come down a bit, the pipeline still remains strong and quality issuances will still see reasonable subscriptions.

Among mainboard IPOs that saw the maximum subscription, food delivery app Swiggy led the pack with a subscription of 2.4 times, followed by Sagility India at 2.2 times.

In October and November, majority of public issues were large in size and belonged to companies with scaled up businesses, said Bhavesh Shah, managing director and head of investment banking at Equirus. He said that typically, when a company with a large issue size or significant scale goes for an IPO, its growth potential needs to be weighed with the valuations compared to smaller, high-growth firms.

In 2024, among the mainboard IPOs, Hyundai Motors India was the biggest in terms of issue size of Rs 27,855 crore. It was followed by Swiggy and NTPC Green Energy.

SME IPOs see a similar decline in subscription levels

The situation is similar for SME IPOs as well. The average subscription in the SME segment in November fell to 112 times, a decline from 242 times in September.

In the SME segment, the IPO of Rajputana Biodiesel was the most subscribed in November at 506 times. It was followed by Onynx Biotech, which was subscribed 138 times. So far this calendar year, 75 mainboard and 225 SME IPOs have come to the market.

In the current calendar year, Danish Power was the biggest in terms of issue size. It had an issue size of Rs 188 crore. It was followed by K P Green Engineering and Sahasra Electronics Solutions with an issue size of Rs 180 crore and Rs 176 crore, respectively.

The last few months have seen regulatory tightening and enhanced monitoring of the SME IPO segment, which has also affected the subscription and listing trends of the segment.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.