Hello, I’m Priyanka Salve, CNBC’s senior correspondent for India, writing from Singapore. This week, I have a look at how international cash is fleeing Indian secondary market but betting on Indian IPOs.
This report is from this week’s version of CNBC’s “Inside India” publication which brings you well timed, insightful information and market commentary on the rising powerhouse. Like what you see? You can 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 pose for a photograph close to the bull statue forward of its Initial Public Offer (IPO) itemizing ceremony at National Stock Exchange (NSE) in Mumbai.
Sopa Images | Lightrocket | Getty Images
The massive story
India’s shopper tech-focused Urban Company’s itemizing on Wednesday supplied a snapshot of worldwide cash flowing into the nation’s major equities market.
The firm’s founders, wearing uniform-like blue jackets and khaki pants, rang the bell on the National Stock Exchange to start out the buying and selling day. And they weren’t the one ones with smiles because the day ended with their firm’s shares hovering practically 60% on debut.
Celebrating with them have been investors from San Francisco, New York, London and Singapore who had been allotted shares of Urban Company final Tuesday at a valuation of 147.90 billion rupees (practically $1.7 billion), based on the IPO submitting. In lower than 10 days, the corporate’s valuation jumped to $2.8 billion. The per share allocation value was 103 rupees, and the inventory was final buying and selling 64% greater at 169 rupees.
The enthusiasm round Urban Company underlines a curious pattern: Since 2024, foreign investors have been internet sellers of Indian equities within the secondary market, but they’ve been dashing into India’s major market, which consists of preliminary public choices and follow-on public provides.
Overseas investors made internet investments to the tune of $14.5 billion within the major market final yr, whereas redeeming $14.4 billion from the secondary markets, based on information from the National Securities Depository. Year to this point, they’ve been internet sellers of stocks value $20.7 billion but have invested internet $4.8 billion within the major market.
“We have found there is a potential to generate alpha by participating in IPOs,” mentioned Hiren Dasani, chief funding officer for rising market at Singapore-based agency White Oak Capital, which participated within the Urban Company IPO.
For international investors, the mathematics is easy. India’s secondary market seems overpriced as in comparison with different rising markets. MSCI India index trades at a price-to-earnings ratio of 25.4x as in comparison with MSCI Emerging Market Index — which incorporates India — with P/E ratio of 15.41x. The MSCI China index trades at 14.6x whereas MSCI Korea index is at 12.4x.
Even the U.S. imposing 50% tariffs on Indian exports has not led to any important correction available in the market, stopping investors from coming into low cost.
In such a state of affairs, IPOs provide a greater play for the Indian markets as managements and bankers value the difficulty attractively, drawing important investor curiosity, specialists instructed CNBC.
Returns from Indian IPOs in 2024 have been starkly greater at 37.1%, in contrast with its inventory market returns of simply over 7%, based on EY’s Global IPO developments report.
“India generally presents an attractive opportunity set for investors, due to the macro background (e.g. GDP growth and favorable demographics), range of interesting business models, and some extremely high-quality management teams,” mentioned Alexander Treves of J.P. Morgan Asset Management in an e-mail response to CNBC, including that IPOs provide the “potential opportunity to build positions in new equities at a transparent price,” permitting investors to make the most of the Indian market.
IPO growth
In 2024, India ranked primary globally in time period of IPO volumes, itemizing practically twice as many firms because the U.S. and greater than two-and-a-half occasions as many as Europe, the EY report confirmed.
In phrases of IPO worth, India ranked second with firms elevating a complete of $19.9 billion final yr in contrast with $32.8 billion raised in U.S. This included the country’s largest and globally the second-largest IPO, Hyundai Motor India, which efficiently raised $3.3 billion from investors.
The present market scenario is a far cry from Coal India’s $3 billion concern a decade again that, per home media, had led to a liquidity crunch within the nation’s banking system, together with large redemptions in mutual funds from investors wanting to put money into the IPO.
The skill of Indian markets to soak up massive issuances has improved, due to the rising flows from home investors, Dasani mentioned, including that if foreign institutional investors can promote with none main “impact cost,” then FIIs may also make investments extra. Impact price refers to the extent to which commerce orders — purchase or promote — can transfer inventory costs.
The regular demand from home institutional investors has deepened fairness markets and improved liquidity, giving FIIs the boldness of taking part in IPOs with out worrying about getting trapped.
For the previous 54 months, fairness mutual funds have seen internet inflows, with property managed by Indian mutual funds rising to about $850 billion in June 2025 from about $696 billion in June 2024, based on information from the Association of Mutual Funds in India. Sizeable fairness markets imply bigger urge for food for greater IPOs, drawing curiosity from FIIs.
“In terms of volume of IPOs, fiscal year 2026 will be similar to FY25, which was a record year in terms of public listings,” says Shouvik Purkayastha, managing director of funding banking at Nuvama. Given quite a few massive corporates queuing up for itemizing this yr, he expects an “uptick in value terms”.
October is prone to witness the launch of Tata Capital’s $2-billion IPO and a similar-sized concern of shares by the Indian subsidiary of South Korea’s LG Electronics, based on media reviews.
Last month, Mukesh Ambani, chairman of Reliance, India’s retail-to-telecom conglomerate, additionally announced plans to checklist his telecom enterprise, Jio Platforms, within the first half of 2026.
This interaction between home and foreign capital is making a virtuous cycle. Strong home participation offers firms confidence to launch greater IPOs and people in flip appeal to foreign investors that choose scale and liquidity.
To put all of it collectively, foreign investors selling within the secondary market whereas writing checks for IPOs shouldn’t be a contradiction, it’s a technique — one which has paid off nicely up to now.
Top TV picks on CNBC
Trade discussions between New Delhi and Washington seem to have taken a extra constructive flip as U.S. Trade Envoy Brendon Lynch met Indian negotiators on Tuesday.
Anubhuti Sahay, head of India economics analysis at Standard Chartered Bank, mentioned that there could be a muted impression on India’s inflation trajectory if New Delhi chooses to maneuver away from Russian oil imports.
Hazem Ben-Gacem, founder and CEO of BlueFive Capital, joined CNBC’s Access Middle East to debate his $2.6 billion fund’s funding technique for India and China.
Need to know
Easier for abroad funds to entry India market. The Securities and Exchange Board of India simplified its guidelines, a transfer that will profit roughly two-thirds of foreign investors, based on Reuters. It additionally relaxed necessities for giant preliminary public choices.
Inflation in India rose in August. The consumer price index came in at 2.07%, assembly analysts’ expectations. That mentioned, it climbed from 1.55% in July due to a rise within the costs of greens, meat and fish, oil and fat, amongst different objects, the federal government mentioned.
India is going through torrential rain — but that is unlikely to push up costs. The key agricultural state of Punjab is going through its worst flood in 40 years, but the impression on cereal manufacturing is restricted, and there may be ample inventory to keep food inflation in check, analysts mentioned.
– Yeo Boon Ping
Quote of the week
The menace that is posed by Bangladesh and Vietnam could be very, very actual. We are already seeing spring summer time, 2026 season U.S. export orders shifting to these nations.
— Ashwin Chandran, deputy chairman, Confederation of Indian Textile Industry
In the markets
India’s Nifty 50 index was buying and selling 0.12% greater as of 1:20 pm native time, whereas the 30-stock BSE Sensex was up 0.15%. The indexes have gained 6.8% and 5.5%, respectively, up to now this yr.
The benchmark 10-year Indian authorities bond yield was buying and selling flat at 6.511%.
Coming up
Sept. 23: HSBC PMI flash for September, wall panel provider Euro Pratik Sales launches IPO
Sept. 24: Steel producer VMS TMT launches IPO
Sept. 25: IT providers agency iValue Infosolutions launches IPO
Each weekday, CNBC’s “Inside India” information present offers you information and market commentary on the rising powerhouse companies, and the folks behind its rise. Livestream the present on YouTube and catch highlights here.
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