Corporate Financing Analysis - Indian Floats On Course For Record Year - 02 OCT 2017


With economic growth in India showing renewed levels of resilience, the outlook for the local IPO arena is looking increasingly positive once more and as a result we expect the country's current bull run for new listings to continue through to end-2017, and beyond in to 2018. We previously identified that India's equity market was set to enjoy a bull run thanks to the relaxation of barriers against foreign investment, and a favourable macroeconomic backdrop to which the local IPO arena is so closely impacted ( see ' Indian Equity Issuers Enjoying Bull Run While It Lasts ' , June 21 2017), and that view has certainly proven to be accurate with the market for first time on course to post a record year for such deals in 2017. At the time of writing, we remain broadly constructive on the Indian economy, and it will remain the fastest growing major economy in Asia owing to robust manufacturing and services sectors as well as support from an accommodative monetary policy by the central bank. In turn, this has seen the Indian IPO stand out not just as one of the best performing in Asia so far in 2017, but also one of the best performing globally.

A Constructive View Of Economic Growth

Despite a revision downwards of BMI's growth forecasts for India's economy for FY2017/18 (April-March) to 6.4% (from 6.9% previously) following a deceleration of real GDP growth in Q1FY2017/18 (quarter ending June) to 5.7% from 6.1% in the previous quarter, our forecasts still reflect a recovery in Indian economic activity in the second half of the fiscal year (September-March) - albeit one which is a below-consensus view of the Indian economy. We expect the Indian government to streamline the Goods & Services Tax (GST) system, which is likely to be positive for the business environment and investment activity. Additionally, consumers and businesses, in particular the manufacturing sector, are also likely to adjust to the new tax system, leading to a pick-up in economic activity, which is ultimately good news for new floats and what dictates our constructive view for growth going forward.

On A Record Roll
Y-T-D Indian IPO Activity By Deal Value, USDmn
Source: Zephyr, a Bureau van Dijk Product

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