India's IPO Boom: 'Half Worthless...' - Mark Mobius On Issues Of 2024

Ace investor Mark Mobius in an exclusive interview with Republic Business threw light on the IPO boom in India. According to a report by the exchange, the Indian stock market witnessed an IPO Boom in 2024 with the National Stock Exchange (NSE) Rs 1.67 lakh crore via the IPO route, the highest amount raised through IPO in the world. Mobius in the interview offered both optimism and caution regarding the surge in initial public offerings.

According to Mobius, the current wave of IPOs is a direct result of the robust performance of the stock market and an optimistic economic climate. As market conditions remain favorable, many companies are eager to capitalize on the opportunity to go public and secure the best possible pricing for their shares.

“There is an IPO boom because the market is doing well, the markets are up, and people are very optimistic. And of course, people who want to issue IPOs think it's a good time for them to get the best price,” Mobius said.  However, Mobius cautioned that this enthusiasm can sometimes lead to inflated valuations, which investors should approach with care. He advised potential investors to wait for IPO prices to settle before diving in, emphasizing that while the excitement around new listings is understandable, it is crucial to evaluate whether the stock prices are truly reflective of a company’s long-term value.

IPOs Continued Growth

Mobius acknowledged that the IPO market in India is poised for continued growth. He forecasted that the number of IPOs will only increase in the coming years, with many new companies looking to enter the market as India’s economy expands. While he anticipated that “half of these IPOs will be worthless,” Mobius remained hopeful that the other half would prove to be highly successful and offer substantial growth potential.

“But the IPO issue will continue to be in India, you're going to continue to see more and more IPOs. Half of these IPOs will be worthless. Half of them will not be viable at all. But there'll be another half that will be very, very good and will grow,” he added. 

Despite the risks, Mobius sees the ongoing IPO activity as a positive sign for the broader market. He pointed out that, when compared to other major economies like the United States, India’s market capitalization is still relatively small, particularly given the country’s strong GDP growth. He noted that a larger and more diverse stock market is needed to match India’s economic expansion, making IPOs an important tool for the development of the Indian financial landscape