Over the past year, there has been a noticeable increase in interest in companies that are about to go public, also known as IPO-bound companies. According to Krishna Patwari, the founder of Wealth Wisdom of India, an online platform for trading unlisted and pre-IPO shares, companies like NSE, Swiggy, HDB Financial, Waaree Energies, Vikram Solar, OYO, Hero Fincorp, and Manjushree Technopack have seen significant growth in trading volumes.
Money managers still believe there are opportunities to make good returns in listed stocks, but it’s becoming more difficult. Vikas Khemani, founder of Carnelian Asset Management & Advisors, noted that when the market is doing well, there’s usually an increase in activity within the IPO and pre-IPO space. He added that India offers a wide range of opportunities in this area, with many new businesses growing quickly and attracting pre-IPO investments.
Investor enthusiasm is clear, as over 50 companies in the unlisted market reached record-high share prices in August, showing strong demand and steady performance, Patwari said.
Nirav Karkera, head of research at Fisdom, explained that the potential for high returns when a company goes public has driven interest in pre-IPO investments. These investments often have limited supply and lower trading volumes, which can lead to less price volatility compared to listed stocks.
Impressive Market Debuts
Many companies that recently went public have delivered impressive gains on their first day of trading, leading investors to expect strong performances from upcoming IPOs. Companies like Ola Electric Mobility Ltd, Indegene Ltd, Brainbees Solutions Ltd, TBO Tek Ltd, Le Travenues Technology Ltd, Unicommerce eSolutions Ltd, BLS E-Services Ltd, and Vibhor Steel Tubes Ltd have seen gains ranging from 20% to 193% after going public.
Karkera mentioned that investors who are willing to take on more risk, hold investments for longer periods, and have a deep understanding of the market are now considering putting more money into pre-IPO opportunities because of their strong growth potential and lower volatility.
Even when the timeline for a company’s IPO is uncertain, there is high demand for unlisted stocks like HDFC Securities, CSK, Tata Capital, Bira, Pharmeasy, Care Health Insurance, and SBI AMC. Investors are eager to capitalize on these pre-IPO opportunities.
In the last six months, some unlisted stocks have seen significant price increases. For example, Tata Capital rose from ₹790 to ₹900, SBI AMC from ₹1,650 to ₹2,300, and Nayara Energy from ₹415 to ₹700, according to data from Wealth Wisdom of India.
Patwari also mentioned that the PRIMEX 40 Private Market Index of India, a proprietary index by Wealth Wisdom, has gained nearly 65% in a year, compared to a 26% increase in the S&P BSE Sensex and 30% in the Nifty 50 as of August 29.
NSE Shares in Demand
Recently, the unlisted shares of NSE soared from ₹3,200 in February to over ₹5,500 due to limited supply and a scarcity of sellers. NSE’s board of directors recently approved a proposal to seek a no-objection certificate from the Securities and Exchange Board of India (Sebi), marking an important step towards its IPO.
Manish Sonthalia, director and chief investment officer at Emkay Investment Managers, pointed out that there’s strong interest in pre-IPO opportunities, and investors see a significant chance to make money in this space. He added that family offices and alternative investment funds are increasingly looking to invest in private equity, pre-IPOs, and startups. Ultra-high-net-worth individuals and portfolio managers are also showing considerable interest in unlisted shares due to their growing risk appetite.
According to Vikaas M. Sachdeva, managing director of Sundaram Alternate Assets Ltd, around 300 of the 10,500 family offices worldwide are in India. About 10% of these Indian family offices invest around 53% of their capital in startups, with a focus on financial services and technology companies in the public markets.
Recent activities in the startup world have also caught attention. For instance, Bollywood legend Amitabh Bachchan’s family office acquired a stake in IPO-bound Swiggy, while Motilal Oswal Financial Services chairman Raamdeo Agrawal also invested in the food-delivery giant and expanded his portfolio to include a stake in quick commerce startup Zepto.
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