The year 2020 presented a grim and greyish image due to the market volatility caused by the COVID-19 pandemic. But as the 2021 first quarter ends, the numbers show that the year was a blockbuster in the making. In the last fiscal year 2020-2021, at least 34 companies went public, raising more than ₹ 21,000 crores in Initial Public Offerings (IPO).
Hopes are soaring high as India enters its new fiscal year, and the Covid-19 dampener is proving to be a blessing in disguise. There is a noticeable surge in the numbers of retail investors, even in the period of extreme volatility, providing impetus to the market in the past year.
An array of Indian startups, who have been disrupting the market in their segment for a while, like Zomato, Delhivery, Policybazaar, Freshworks, Flipkart, Nykaa, are reportedly eyeing the public markets in 2021. Many others like BYJU’S, Pepperfry have not set their deadline of entering the public market but have raised the buzz for a blockbuster IPO debut.
Long haul lockdowns and increasing shifts towards remote working due to the pandemic have worked in favour of the industry, as the Securities and Exchange Board of India (SEBI) data shows. The confidence by retail investors in the market despite the revenue loss bloodbath due to the pandemic in 2020 shows that resilience and positivity are driving the market, and this will continue for 2021-2022 fiscal.
The SEBI data shows that new dematerialized or Demat account additions rose to an all-time high of 10.7 million between April 2020 and January 2021. It is an increase of more than double the new accounts opened in FY20 at 4.7 million. This coupled with support from the Indian government, has made the Indian IPO market realize its true potential.
Ravi Gururaj, a board member of TiE Bangalore, said, “This is the year that Indian startups have marked in their calendars along with the investors, who can now finally reap what they have sowed. Everything seems to be moving in a positive direction, and even if few companies go public, it will instil new confidence in the Indian startup market.”
As the Indian government welcomes the positive momentum of IPOs of 2020, the surge witnessed will continue. As several retail investors from last year adds up in 2021, more companies will be tapping the primary market to raise funds in the post-pandemic recovery phase. It will mark a new period in the Indian Startup era, with projections being that a whopping ₹ 41,863 crore is likely to be raised this year.
In addition to it, several reforms and measures implemented by the government of India (GOI) including the production linked incentive (PLI) schemes to boost domestic manufacture and stimulate investment in the country will thrust for higher capital requirement among corporates, pushing more companies to look forward to fundraising through the IPO route.
