The year 2024 is going to be a year of lucrative opportunities for investors and traders. As the new year approaches, investors and traders can explore imminent initial public offerings that are about to hit the market. While investing in IPOs can be exciting and risky, it is a great way to participate in the growth story of a potentially groundbreaking venture.
However, it is necessary to consider different factors before investing in companies going for an IPO. In this article, we will give you insights and key inputs into companies that are going to launch their IPOs in 2024. It will enable you to make an informed decision and further capitalize on the best opportunities in the financial market.
Factors you should consider before investing in an IPO
1. Read Draft Red Herring Prospectus
Draft Red Herring Prospectus contains all the information regarding how the company is planning to use funds obtained from the public. A company files this document with SEBI before going public. So, to know what the company is intending you must read this document. Then decide to invest in an IPO.
2. Business model of a company
Understanding the company’s business model is very crucial. Know what are the company’s products and services, what is its expertise in the market, etc. You should also try to know what the new market opportunities are for the particular company. It will give you an idea about how much market share the company can gain and how the company will grow.
3. Management and promoters’ background
Promoters and management are the most important factors to consider. A reputable and strong promoter surely indicates positive growth for the company. So, consider researching these.
4. SWOT analysis of the company
Conduct a SWOT (Strength, Weakness, Opportunities, and Threats) analysis of a company that you are going to invest in. You can get details about the strengths and weaknesses of a company through its DRHP document.
5. IPO GMP
Before investing in an IPO, it is a must to know what the gray market is and GMP IPO. First of all, the gray market is an informal and unofficial market where IPO shares are traded before listing on the stock exchange.
GMP is the gray market premium. It is the difference between the share price of an IPO at which they are traded in this market and the price of an IPO issue
6. Company’s financial performance
Check how the company has performed over the past few years. This will give you an idea about whether the company’s sales and profit are regularly expanding.
Upcoming IPO in 2024
The first company which will be launching its IPO in 2024 is Ola Electric. Ola is the leading EV (Two-wheeler) company in India. Ola manufactures two-wheelers including scooters, S1, and S1 pro.
Ola has several high-profile investors. Investors like Tiger Global back it. SoftBank, and Temasek. Ola’s manufacturing facility is located in Krishnagiri, Tamil Nadu. In 2023 the company reported revenue of US$ 335 million. It further reported an operating loss of nearly US$ 136 million.
A leading online payments platform in India, PhonePe, is all set to go public in India and raise $2 billion from investors. The company intends to use these funds to grow its new businesses, like insurance, mutual funds, and e-commerce. According to the Morgan Stanley report in 2019, PhonePe had a valuation of $7 billion.
The user base of PhonePe is more than 230 million, out of which the active users every month are nearly 90 million. The company is continuously expanding its financial service offerings. In the last four months, it has launched six new products in the insurance and mutual fund segment. These products have attracted customers from over 15,000 locations across different cities and towns.
BYJU’s, one of the leading edtech companies, will be going public with its test preparatory subsidiary Aakash Education Services Limited (AESL) in 2024. The company expects AESL to generate Rd 4,000 crore in revenue and Rs 900 crore in operational profit in FY 2023-24.
With this IPO the company is aiming to strengthen its infrastructure and expand its reach. The main goal of the company is to provide high-quality test-prep education to more students across India. Byju acquired AESL for around Rs 7,100 crore in April 2021, and since then, Aakash’s profit has tripled. The test-prep market is expected to grow at a CAGR of 9.3% from 2020 to 2025. It is mainly driven by the online segment, which is expected to grow at a CAGR of 42.3 percent in the same period, according to Ken Research.
PayU is a payment gateway and fintech company owned by Prosus. Prosus is a South African conglomerate. The company is preparing to go public in India with an IPO of at least $500 million. PayU operates in India and other markets and offers various services such as buy now and pay later. The company competed with Razorpay and PhonePe, both backed by Tiger Global.
The IPO could value PayU at $5 billion to $7 billion. PayU is tapping into the booming digital payment market in India. This online payments market is expected to grow from $3 trillion in 2023 to $10 trillion in 2026, as per a report by Boston Consulting Group and PhonePe. PayU reported a 31% growth in its India revenue in June and reached $399 million, driven by its enterprise and SMB segment. The company also promoted its India CEO Anirban Mukherjee to global CEO.
Swiggy, a startup backed by SoftBank, is also preparing to launch its IPO in 2023. Swiggy earlier paused the process for months due to weak markets. But now they have started talking to bankers to evaluate its worth.
Swiggy raised funds at a $10.7 billion valuation in 2022. They have delayed their IPO plans like many Indian startups because of a funding crunch and investor worries about high valuations. But as we can see now the markets have recovered globally and in India. Now Swiggy has resumed its IPO preparation. It has asked eight investment banks to work on the IPO.
Emcure Pharmaceutical Company is also planning to go public by 2024. The IPO will be of $400-500 million. The company has earlier postponed its listing plans in 2022 due to the global market downturn caused by the Russia-Ukraine war. The company has appointed JP Morgan, Jeffries, and Kotak as its investment banks for the IPO. The company is aiming for a valuation of around $3 billion. The pharma sector is witnessing a lot of merger and acquisition activity, with record-high company valuations. One of the potential deals is between Torrent Pharma, a drug manufacturer, and Cipla, a larger rival, which could be worth about $7 billion, making it the biggest pharma deal ever in India.
Wellness Forever Medicare Limited is the third-largest retail pharmacy and wellness network in India. The company is also going to launch their IPO in 2024. They operate an omnichannel, hyperlocal retail network under the brand name of wellness forever. Wellness Forever opened its first drugstore in 2008. They have expanded their retail network to 236 stores in 23 cities across India. Their stores are spread across the states of Maharashtra, Karnataka, and Goa.
They offer nearly 91,500 pharmaceutical and wellness products. Alongside over-the-counter and prescription medicines, their products include fast-moving consumer goods (FMCG), fast-moving health goods (FMHG), medical equipment, and nutraceuticals.
Best IPOs in 2023
Tata Technologies IPO
Tata Technologies is a global engineering company. It offers product development and digital transformation services for the automotive, industrial heavy machinery, and aerospace industries. It is a unit of Tata Motors Ltd and a leading global engineering services company.
Tata Technologies started its IPO bidding on November 22, 2023, and ended on November 24, 2023. The allotment was finalized on November 28, 2023, and shares were listed on BSE and NSE on November 30, 2023. The price band was set at Rs 475 to Rs 500 per share and the lot size was 30 Shares.
IREDA (Indian Renewable Energy Development Agency Limited) is a government of India enterprise. It works towards giving financial support to projects and schemes for generating electricity and energy through new and renewable sources and conserving energy through energy efficiency.
IREDA IPOs started their bidding on November 21, 2023. It ended on November 23, 2023. The allotment was finalized on November 24, 2023, and the company’s shares were listed on BSE and NSE on November 29, 2023. The price band was set to Rs 30 to Rs 32 per share and the lot size was 460 shares.
How to apply for an IPO?
You can apply for IPOs in 2 ways. The first one is through brokers and the second is through internet banking. You can follow these steps to issue an IPO through a broker:
- Locate the IPO tab on your Demat account.
- Select the IPO name from the list of companies.
- Enter the lot size which you have decided.
- Select the bid price.
- Enter your UPI ID, click submit, and approve the transaction from your UPI application.
- You must wait for the mandate notification in your UPI app. This will block the application money until the shares are allotted to you.
If you want to apply for an IPO through Internet banking, then follow these steps:
- Log in to your Internet banking account.
- Find the ASBA tab and click on it. tab and click on it.
- Now click on the ‘Apply IPO’ tab and select the IPO to apply.
- Fill in details like applicant name and PAN, bid quantity, and price. Then hit the submit button.
The bid will be accepted on the same day if you place it before 2 PM on a working day. Otherwise, the bid will be scheduled for the next day.
Tips to invest in IPOs
By now, you have grasped how to navigate the IPO market and which are the most anticipated IPOs in 2024. So, here are some additional tips for your IPO investment journey:
- Be skeptical and do thorough research.
- Don’t overlook the DRHP document.
- Bid at the cutoff price as it increases the chances of IPO allotment.
- Know the valuation of companies.
Be prepared with an exit strategy.
Remember, the IPO market is very uncertain. The price movements cannot be predicted easily because there is a lot of volatility. There can be some IPOs that have given around 90% or more returns in a few months, but that’s not the case with all. This could also be the other way around. So, the only takeaway for you is to be cautious while investing in an IPO. Consider the factors and then only decide to invest.
FAQs about Upcoming IPOs
1. What is the IPO application time?
Ans. An IPO is generally open for 3 days minimum and 10 days maximum. Your subscription gets accepted on stock exchanges between 10:00 a.m. and 5:00 p.m. on days when the IPO is available for subscription.
2. Can I sell shares on listing day?
Ans. Yes, you can sell shares on the listing day of an IPO. You can get listing gains if you sell shares on listing days. Because according to past years’ IPO performance, many companies perform very well on listing day.
3. What is the silent period after an initial public offering?
Ans. The quiet period is a period during which a company that has recently gone public is restricted from making certain statements or forecasts that could affect its stock price.
4. What is the last stage of an IPO?
Ans. The last stage of the IPO is the transition to market competition. It commences 25 days post the IPO, once the silent period ends