Hello, I americium Priyanka Salve, CNBC's elder analogous for India, penning from Singapore. This week, I look astatine however planetary wealth is fleeing Indian secondary marketplace but betting connected Indian IPOs.
This study is from this week's variation of CNBC's "Inside India" newsletter which brings you timely, insightful quality and marketplace commentary connected the emerging powerhouse. Like what you see? You tin subscribe here.
LEAD PICTURE
MUMBAI, MAHARASHTRA, INDIA - 2025/09/17: (L-R) Varun Khaitan, Executive Director and Chief Operating Officer, Raghav Chandra, Executive Director and Chief Technology and Product Office and Abhiraj Singh Bhal, Chairperson, Managing Director and Chief Executive Officer of Urban Company Limited airs for a photograph adjacent the bull statue up of its Initial Public Offer (IPO) listing ceremonial astatine National Stock Exchange (NSE) successful Mumbai.
Sopa Images | Lightrocket | Getty Images
The large story
India's user tech-focused Urban Company's listing connected Wednesday offered a snapshot of planetary wealth flowing into the country's superior equities market.
The company's founders, dressed successful uniform-like bluish jackets and khaki pants, rang the doorbell astatine the National Stock Exchange to commencement the trading day. And they weren't the lone ones with smiles arsenic the time ended with their company's shares soaring astir 60% connected debut.
Celebrating with them were investors from San Francisco, New York, London and Singapore who had been allotted shares of Urban Company past Tuesday astatine a valuation of 147.90 cardinal rupees (nearly $1.7 billion), according to the IPO filing. In little than 10 days, the company's valuation jumped to $2.8 billion. The per stock allocation terms was 103 rupees, and the banal was past trading 64% higher astatine 169 rupees.
The enthusiasm astir Urban Company underlines a funny trend: Since 2024, overseas investors person been nett sellers of Indian equities successful the secondary market, but they person been rushing into India's superior market, which consists of archetypal nationalist offerings and follow-on nationalist offers.
Overseas investors made nett investments to the tune of $14.5 cardinal successful the superior marketplace past year, portion redeeming $14.4 cardinal from the secondary markets, according to information from the National Securities Depository. Year to date, they person been nett sellers of stocks worthy $20.7 cardinal but person invested nett $4.8 cardinal successful the superior market.
"We person recovered determination is simply a imaginable to make alpha by participating successful IPOs," said Hiren Dasani, main concern serviceman for emerging marketplace astatine Singapore-based steadfast White Oak Capital, which participated successful the Urban Company IPO.
For planetary investors, the mathematics is simple. India's secondary marketplace looks overpriced arsenic compared to different emerging markets. MSCI India scale trades astatine a price-to-earnings ratio of 25.4x arsenic compared to MSCI Emerging Market Index — which includes India — with P/E ratio of 15.41x. The MSCI China scale trades astatine 14.6x portion MSCI Korea scale is astatine 12.4x.
Even the U.S. imposing 50% tariffs connected Indian exports has not led to immoderate important correction successful the market, preventing investors from entering cheap.
In specified a scenario, IPOs connection a amended play for the Indian markets arsenic managements and bankers terms the contented attractively, drafting important capitalist interest, experts told CNBC.
Returns from Indian IPOs successful 2024 were starkly higher astatine 37.1%, compared with its banal marketplace returns of conscionable implicit 7%, according to EY's Global IPO trends report.
"India mostly presents an charismatic accidental acceptable for investors, owed to the macro inheritance (e.g. GDP maturation and favorable demographics), scope of absorbing concern models, and immoderate highly high-quality absorption teams," said Alexander Treves of J.P. Morgan Asset Management successful an email effect to CNBC, adding that IPOs connection the "potential accidental to physique positions successful caller equities astatine a transparent price," allowing investors to instrumentality vantage of the Indian market.
IPO boom
In 2024, India ranked fig 1 globally successful word of IPO volumes, listing astir doubly arsenic galore companies arsenic the U.S. and much than two-and-a-half times arsenic galore arsenic Europe, the EY study showed.
In presumption of IPO value, India ranked 2nd with companies raising a full of $19.9 cardinal past twelvemonth compared with $32.8 cardinal raised successful U.S. This included the country's largest and globally the second-largest IPO, Hyundai Motor India, which successfully raised $3.3 cardinal from investors.
The existent marketplace concern is simply a acold outcry from Coal India's $3 cardinal contented a decennary backmost that, per home media, had led to a liquidity crunch successful the country's banking system, including monolithic redemptions successful communal funds from investors anxious to put successful the IPO.
The quality of Indian markets to sorb ample issuances has improved, acknowledgment to the rising flows from home investors, Dasani said, adding that if overseas organization investors tin merchantability without immoderate large "impact cost," past FIIs tin besides put more. Impact outgo refers to the grade to which commercialized orders — bargain oregon merchantability — tin determination banal prices.
The dependable request from home organization investors has deepened equity markets and improved liquidity, giving FIIs the assurance of participating successful IPOs without worrying astir getting trapped.
For the past 54 months, equity communal funds person seen nett inflows, with assets managed by Indian communal funds rising to astir $850 cardinal successful June 2025 from astir $696 cardinal successful June 2024, according to information from the Association of Mutual Funds successful India. Sizeable equity markets mean larger appetite for bigger IPOs, drafting involvement from FIIs.
"In presumption of measurement of IPOs, fiscal twelvemonth 2026 volition beryllium akin to FY25, which was a grounds twelvemonth successful presumption of nationalist listings," says Shouvik Purkayastha, managing manager of concern banking astatine Nuvama. Given a fig of large corporates queuing up for listing this year, helium expects an "uptick successful worth terms".
October is apt to witnesser the motorboat of Tata Capital's $2-billion IPO and a similar-sized contented of shares by the Indian subsidiary of South Korea's LG Electronics, according to media reports.
Last month, Mukesh Ambani, president of Reliance, India's retail-to-telecom conglomerate, besides announced plans to database his telecom business, Jio Platforms, successful the archetypal fractional of 2026.
This interplay betwixt home and overseas superior is creating a virtuous cycle. Strong home information gives companies assurance to motorboat bigger IPOs and those successful crook pull overseas investors that similar standard and liquidity.
To enactment it each together, overseas investors selling successful the secondary marketplace portion penning checks for IPOs is not a contradiction, it is simply a strategy — 1 that has paid disconnected good truthful far.
Top TV picks connected CNBC
Trade discussions betwixt New Delhi and Washington look to person taken a much affirmative crook arsenic U.S. Trade Envoy Brendon Lynch met Indian negotiators connected Tuesday.
Anubhuti Sahay, caput of India economics probe astatine Standard Chartered Bank, said that determination would beryllium a muted interaction connected India's ostentation trajectory if New Delhi chooses to determination distant from Russian lipid imports.
Hazem Ben-Gacem, laminitis and CEO of BlueFive Capital, joined CNBC's Access Middle East to sermon his $2.6 cardinal fund's concern strategy for India and China.
Need to know
Easier for overseas funds to entree India market. The Securities and Exchange Board of India simplified its rules, a determination that would payment astir two-thirds of foreign investors, according to Reuters. It besides relaxed requirements for ample archetypal nationalist offerings.
Inflation successful India roseate successful August. The consumer terms scale came successful astatine 2.07%, gathering analysts' expectations. That said, it climbed from 1.55% successful July due to the fact that of an summation successful the prices of vegetables, nutrient and fish, lipid and fats, among different items, the authorities said.
India is facing torrential rainfall — but that's improbable to propulsion up prices. The cardinal cultivation authorities of Punjab is facing its worst flood successful 40 years, but the interaction connected cereal accumulation is limited, and determination is capable banal to keep nutrient ostentation successful check, analysts said.
– Yeo Boon Ping
Quote of the week
The menace that's posed by Bangladesh and Vietnam is very, precise real. We are already seeing outpouring summer, 2026 play U.S. export orders moving to those countries.
— Ashwin Chandran, lawman chairman, Confederation of Indian Textile Industry
In the markets
India's Nifty 50 scale was trading 0.12% higher arsenic of 1:20 p.m. section time, portion the 30-stock BSE Sensex was up 0.15%. The indexes person gained 6.8% and 5.5%, respectively, truthful acold this year.
The benchmark 10-year Indian authorities enslaved output was trading level astatine 6.511%.
Coming up
Sept. 23: HSBC PMI flash for September, partition sheet supplier Euro Pratik Sales launches IPO
Sept. 24: Steel shaper VMS TMT launches IPO
Sept. 25: IT services steadfast iValue Infosolutions launches IPO
Each weekday, CNBC's "Inside India" quality amusement gives you quality and marketplace commentary connected the emerging powerhouse businesses, and the radical down its rise. Livestream the amusement connected YouTube and drawback highlights here.
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