India Is Hot! New IPO’s Are Massively Oversubscribed
A sign of the desire to get into the new Indian dynamic has manifested itself this past few days with the massive over-subscription of several Indian initial public offerings (IPOs) coming to market.
The DMart IPO closed at USD260 million and was oversubscribed by a multiple of 104. The Radio City IPO was oversubscribed by a factor of three, and another four IPOs are due in India this month, excluding today’s listings of Laxmi Cotspin, Manas Properties, Maximus International and Octaware Technologies.
This shows the gradual realization that the Indian consumer market is the place to be.
The interesting part of the DMart IPO and Radio City IPOs is the amount of latent capital that has not entered the Indian stock market due to over-subscription. The over-subscriptions on the DMART and Radio City offerings this week amount to USD30 billion – equivalent to 1.5% of India’s entire GDP.
Clearly, there is investment capital waiting for good homes in India, and a domestic market with the capital to do so.
The dynamic is similar to the China craze that began about 10 years ago. While the Indian IPO figures may still seem small in comparison with those achieved by Chinese conglomerates in Hong Kong today, it was only ten years ago that Chinese IPOs were listing at the same value as the DMart offering in India now.
India currently possesses a similar sized middle class consumer market to China today, which suggests that Indian stocks are probably undervalued right now.
While China’s consumer market will start to overtake India’s due to various age demographics, the correlation between the boom that fueled massive Chinese growth from 2005 should not be underestimated in terms of its similarity to India’s position today.
Furthermore, the rules for listing in India only require that a company should have shown a profit for the last three years. This is a time for Indian entrepreneurs to get stuck in, and ride what promises to be an exciting ten years in making India both an Asian consumer tiger and the workshop of the world.
Chris can be followed on Twitter at @CDE_Asia.
Dezan Shira & Associates Brochure Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
An Introduction to Doing Business in India 2017 is designed to introduce the fundamentals of investing in India. As such, this comprehensive guide is ideal not only for businesses looking to enter the Indian market, but also for companies who already have a presence here and want to stay up-to-date with the most recent and relevant policy changes.
Passage to India: Selling to India’s Consumer Market In this issue of India Briefing magazine, we outline the fundamentals of India’s import policies and procedures, as well as provide an introduction to engaging in direct and indirect export, acquiring an Indian company, selling to the government and establishing a local presence in the form of a liaison office, branch office, or wholly owned subsidiary. We conclude by taking a closer look at the strategic potential of joint ventures and the advantages they can provide companies at all stages of market entry and expansion.
- Previous Article Medical Tourism in India: Industry Growing to Meet Demand
- Next Article Indian Government Revamps Trade Mark Rules