Uday Kotak Calls For Increase In Equity Supply Amidst IPO Boom In Indian Markets

At a time when the Indian benchmark stock indices are hitting a fresh record high almost every other day, billionaire banker Uday Kotak muses the need to increase the supply of equity through new listings and secondary sales.

The comment by the founder and director of Kotak Mahindra Bank also comes at a time when the primary market is set to see a wave of IPOs.

Uday Kotak, in a post on social media platform X (formerly Twitter), said, "Indian equities have had unprecedented growth in the COVID era. Economics 101 of supply and demand is the way forward. Time to increase the supply of equity through new listings, growth for listed companies, secondary sales in low floating stock companies, private or public sector."

Two mainboard segments and seven small and medium enterprises will launch their initial public offerings this coming week. The markets will see the opening of Allie Blenders and Distilleries, the makers of Officer's Choice whisky, and Vraj Iron and Steel.

So far in 2024, 33 companies have collectively raised Rs 27,845.38 crore, a notable figure when compared to the Rs 49,400 crore raised by 58 companies throughout 2023.

There has been a trend where the demand for shares exceeds the number offered in an issue, leading to oversubscription.

All 33 IPOs this year received oversubscriptions, with Vibhor Steel Tubes leading the pack with 298.86 times subscriptions, followed by BSL E-Services and Mukka Proteins with subscription rates of 162.47 times and 136.99 times, respectively.

IPOs In 2024

Oversubscribed issues are typically viewed as successful, often resulting in premium listings due to the substantial demand they attract.

Le Travenues Technology Ltd., the parent company of online travel agency Ixigo, recently went public. On listing day, the shares closed at a premium of 78% on the National Stock Exchange and 74% on the BSE. Even Awfis Space Solutions closed with a premium of 8.64%.

This year will also see the listing of Ola Electric Mobility, which has gotten the go-ahead from SEBI. The Bhavish Aggarwal-led company's public issue consists of a fresh issue of Rs 5,500 crore and an offer-for-sale of 9.51 crore equity shares, according to the draft red herring prospectus.

Another big name to enter the market is Hyundai Motor's Indian subsidiary, which recently filed draft papers to raise approximately $2.5-billion.