Swiggy, ACME Solar, Sagility, Afcons IPOs see muted response. Is the market showing signs of fatigue?

Averting a scare, the highly anticipated initial public offering (IPO) of foodtech unicorn Swiggy sailed through on the last day of the bidding process. A similar trend was observed in the recent IPOs of ACME Solar Holdings, Sagility India, and Afcons Infrastructure, with all these issues managing to get fully subscribed on the final day of offer. All these four companies collectively raised ₹21,764 crore through IPO route, of which more than half the amount was garnered by Swiggy alone.  

 The ₹11,300 crore IPO of Swiggy, which is the second biggest issue of the year after Hyundai Motor India's ₹27,856-crore public offering, received 3.59 times bidding on the final day, which opened for subscription between November 6-8. The mega IPO garnered tepid response on the first two days of bidding, with the public offer of the online food delivery company subscribing by 0.12 times on Day 1, followed by 0.35% times on Day 2. On the final day, the IPO sailed through as retail investors and qualified institutions buyers (QIB) lined up to subscribe the issue. The public issue was subscribed 1.14 times in the retail category, 6.02 times in QIB, and 0.41 times in the non-institutional investor (NII) segment. The portion reserved for employees was booked 1.65 times.

Similarly, ACME Solar Holdings’ IPO received a muted response from investors in the first two days of bidding but managed to fully subscribe on the final day. The ₹2,900 crore IPO of the solar energy company was booked 2.89 times today, after getting 0.42 times and 0.74 times bidding on Day 1 and Day 2, respectively. The quota reserved for retail investors was booked 3.25 times, while QIB and NII portions were subscribed 3.72 times and 1.02 times, respectively.

On the other hand, the ₹2,106-crore IPO of Sagility India, which opened for subscription between November 5-7, was subscribed 3.20 times. The issue was booked 0.23 times on first day and 0.52 times on second day. Overall, the issue was subscribed 4.16 times, 3.52 times, and 1.93 times in the retail, QIB, and NII categories, respectively.

Meanwhile, the ₹5,430-crore IPO of Afcons Infrastructure, a subsidiary of the Shapoorji Pallonji Group (SP Group), was subscribed 2.77 times, which started for bidding from October 25 and ended on October 29. The IPO received a tepid response in the first two days of bidding, with the issue subscribing merely by 0.1 times on October 25, followed by 0.36 times on October 28. However, the issue got fully subscribed on the final day amid good response from non-institutional investors (NIIs) and qualified institutional buyers (QIBs). The quota reserved for NIIs and QIBs was subscribed 5.31 times and 3.99 times, respectively, whereas Employee Portion was subscribed 1.77 times. The retail portion, however, failed to fully subscribe as it received 0.99 times bids.

Before Afcons, Hyundai Motor India received lukewarm response for the country’s biggest-ever IPO. Despite a lot of buzz, the issue, which opened between October 15-17, was subscribed 2.37 times due to muted response from retail and NIIs.

Is the market showing early signs of fatigue?

India’s IPO market, which witnessed an astounding surge in new offerings post Covid crash in March 2020 with the Rossari Biotech offer, is showing early signs of fatigue. This may be because of investors struggling to get breathing space amid back-to-back IPOs. They are becoming a lot more selective and prefering high-quality companies that generate free cash flow and a reasonable return on equity.

Over the past four years, the Indian equity market has seen a flurry of IPOs. In 2021, 63 companies went public, raising ₹1.18 lakh crore. In 2022, 40 IPOs garnered ₹60,000 crore from the primary market despite global headwinds, followed by ₹49,000 crore accumulated by 57 firms in 2023. As of October 2024, 68 companies have already gone public, raising more than ₹1 lakh crore, and are on the verge to break all previous records.

Going ahead, the pipeline is huge, with 26 companies proposing to raise ₹72,000 crore are presently holding SEBI approval while another 55 companies looking to raise about ₹89,000 crore are awaiting SEBI approval, as per the data from PRIME Database.