The initial public offering (IPO) landscape is witnessing a spike due to positive domestic and foreign investor sentiment toward India.
Last year consumer startups like Zomato, Nykaa, and Paytm, among others made headlines when they were listed, this year Mankind Pharma, Honasa Consumer (Mamaearth parent company) and Cello World, among a few other big players took the spotlight.
Listing on stock exchanges is a big moment for any company. But what’s the immediate impact on a brand after the company goes public?
Vivek Sharma, an independent marketing consultant and former Pidilite CMO, is of the opinion that listed entities become much more responsible brands because they become accountable to multiple stakeholders. “Brands become more conscious and are thoughtful about their public conduct. There is no scope of grey areas.”
Gen Z driving IPOs
Experts that Storyboard18 spoke to said that Gen Z investments in IPOs are rising because of strong brand and product awareness by new-age companies along with the increasing understanding of stock trading and wealth management in the last couple of years. An agency head who is an active investor in consumer startups told Storyboard that Gen Z want to build their portfolio basis the businesses they understand and use.
Brand experts also believe that the value and prestige that come with listing on a major stock exchange immediately widens and diversifies the audience. Being in the public market itself gives startup brands immense reach and recall in a diverse country like India. But a listing almost immediately puts additional pressure on brands, which can come from anywhere. That’s something brands should be well prepared for, say experts.
Going public is the beginning of a new story for brands. The credibility and trust net will just widen from here, as there is no scope for hiding. The true test of the brand is after the IPO, they say.
The IPO boom
According to an EY report, India has emerged as the global leader in the number of IPOs year-to-date in 2023. The third quarter of 2023 saw a staggering 21 IPOs in the Indian main market, compared to just four in the same quarter of 2022. Companies with strong and well-governed business models are being rewarded by the market, as over 25 firms plan to raise funds in the upcoming quarters, with this IPO momentum expected to continue into H2 2024.
Key sectors contributing to this IPO surge include Diversified Industrial Products, Consumer Products and Retail, and Technology. The Small and Medium Enterprises segment also recorded significant success by raising $165.76 million via 48 IPOs in Q3 2023.