Primary Markets See Strong Start in 2025 Amid Secondary Market Turmoil:

With the corrections and turbulence still in place in the secondary markets, the primary market is having a strong start af a calendar during this time as capital raised in the first two months is record high.

From January to February of 2025, 9 mainboard companies launched their IPOs raising over Rs 15,723 crore and 40 SMEs that debuted raised nearly Rs 1,804 crore.

This is a stark comparison to 2024 where the first two months had 16 mainboard IPOs raising around Rs 10,763 crores and 34 SMEs IPOs collectively raised Rs 1,140 crore. In 2023, there was zero mainboard IPOs during the start of the year and 21 SMEs raised around Rs 340 crores.

Analysts attribute these shifts to increased foreign investment by the more aggressive and risk tolerant foreign investors as market turbulence and corrections are high. Foreign Institutional Investors (FIIs) continued to be net buyers in the primary market. In February, they spent earlier $825 million while in January, they bought $449 million. However, they have been heavily divesting in the secondary markets selling off approximately $4 billion in February and over $9 billion in January according. According to NSDL, during the same period, some investments were made into the market.

As Kranthi Bathini, Director Equity Strategy with WealthMills Securities, mentions, the opening period of the year had a strong uptick in activity in the primary market due to IPOs for Hexaware Tech and Dr. Agarwal’s Health Care. This followed an explosive IPO season in 2024 which suffered from secondary market pressure.

As he puts it, even with constant selling pressure in the secondary market, FIIs were still keen on IPOs, albeit retail investor attendance was sparse. In the future, there is a possibility that IPOs and new draft submissions might decrease due to ongoing global sell offs without any indication of recovery.

A section of experts are of the view that managements feel that due to increasing competition and geopolitical strains, IPOs are able to raise an above average amount of capital on average.

Aditya Kondawar, Partner & Vice President, Complete Circle Capital mentioned that some IPOs proceeded while the general market was correcting at the broad level because, in his opinion, the management believed there was little chance of a buoyant stock market in the foreseeable future. Thus it was wise to utilize the window of opportunity and token up funds instead of having to deal with refiled DRHPs.

During this period, the largest IPO was registered by Capital Numbers Infotech in the SME segment, with a remarkable value of over 169 crores. Other notable IPOs include Chandan Healthcare with 107 crores as well as Solarium Green Energy and Tejas Cargo India which raised 103 crores each. Rikhav Securities Ltd, EMA Partner India and Ken Enterprises also initiated some IPOs. Out of the 40 SME IPOs, around 28 are consistently trading below their issue price, 4 are flat, while 8 are slightly above their issue prices.

Similarly, in the main board Hexaware Technologies was the leader in the IPO market in the first two months of 2023 with an astounding issue of 8750 crores. Following them was Dr. Agarwal’s Health Care Ltd with an issue of 3027.26 crores as well as Ajax Engineering who raised 1268.93. Other relevant IPOs that are listed include Quality Power Electrical Equipments, Laxmi Dental, Quadrant FutureTek, Indo Farm Equipment and Standards Glass Lining Technology. Six of these firms are trading below the issue price while the rest are trading marginally above this mark. Thin growth stocks dry up the liquidity window in question as they rely solely on market fluctuations.