The recent surge in initial public offerings (IPOs) in the Indian market has resulted in investment banks (i-banks) witnessing significant growth in fee income. According to data analyzed, bankers have experienced a substantial 36% increase in fee income, reaching ₹509.2 crore in H1FY24.
So far in this fiscal year, 19 companies have raised ₹17,419.7 crore through IPOs, as reported by the Securities and Exchange Board of India (SEBI). In H1FY23, investment banks earned IPO fee income of ₹373.6 crore from 13 IPOs, which raised ₹34,758 crore. The previous year’s IPO activity was dominated by the listing of Life Insurance Corporation of India, which raised ₹20,557 crore but generated a fee of only ₹11.8 crore.
Top fee earners in H1FY24 include Mankind Pharma, which saw investment banks earn a total fee of ₹102.2 crore, and RR Kabel, generating a fee income of ₹52.1 crore for the bankers.
With six more IPOs set to close before the end of September, including JSW Infrastructure, aiming to raise ₹2,800 crore, fee income for H1 is expected to continue rising for investment banks. This IPO rush in the first half of the fiscal year has been driven by the buoyant Indian stock markets, which have seen a nearly 15% increase since April 1, with the Nifty recently reaching 20,000.
Abhijit Tare, MD & CEO of Motilal Oswal Investment Advisors, noted that market momentum is paving the way for both premiumization and commoditization. Existing stocks are gaining value, while new stocks are benefiting from the euphoria, indicating a shift in valuation and accessibility. Tare added that this favorable market environment has resulted in an increase in IPOs, boosting the revenue streams of financial institutions and leading to remarkable fee generation by bankers.
The strong performance of recent IPOs on their listing days is also contributing to the momentum in the primary market. New listings, such as drone maker ideaForge Technologies and private lender Utkarsh Small Finance Bank, have delivered listing day gains of over 90% to investors.
Looking ahead to the second half of the fiscal year, despite potential disruptive events like five state elections in November-December and likely general elections in April-May, bankers are optimistic that the momentum in the primary market will continue to remain robust.
