IPO Opportunities to Invest in the Year 2024

IPO Opportunities to Invest in the Year 2024. The year 2024 is shaping up to be an exciting one for initial public offerings (IPOs) in India. After a record breaking 2021 that saw over 60 companies debut on the stock exchanges, the IPO pipeline remains strong. With several high-profile startups and mature private companies preparing to go public, investors have some intriguing options to consider.

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IPO Opportunities to Invest in the Coming Year 2024

Here is an overview of some of the most anticipated IPOs to invest in 2024:

Ola Electric: One of the most awaited IPOs is from Ola Electric, the electric vehicle arm of ride-hailing giant Ola. Ola Electric made waves in 2021 with the launch of its electric scooters and is now looking to supercharge its growth through the public markets. As per media reports, Ola Electric is targeting a valuation of $5-10 billion and could raise upwards of ₹7,000 crore from its IPO planned for mid-2024. With the EV market projected to grow exponentially in India, Ola Electric provides exposure to this secular trend. Its unique vertically integrated model, wide product portfolio, and brand appeal make it a hot IPO prospect.

However, Ola Electric is likely to face fierce competition from players like Ather Energy, Hero Electric and OEMs foraying into EVs. Execution challenges in ramping up manufacturing capacity and ensuring product quality need monitoring. But its first mover advantage and access to Ola’s ecosystem network make it a compelling investment case.

Delhivery: Delhivery, one of India’s largest logistics startups, is expected to launch its IPO in early 2024 according to BSE filings. The company could be valued at $6-7 billion for its IPO based on private funding rounds. Delhivery has benefited from the massive growth in e-commerce and the digitization of supply chains. It serves a blue chip clientele of online retailers, SMEs and enterprises with services spanning transportation, warehousing, cross-border logistics and more. Delhivery’s vast network, technology integration and scale give it an edge versus competition.

However, the logistics industry has low entry barriers. Delhivery needs to demonstrate path to profitability and ability to withstand pricing pressures. But its capacity to handle surges in e-commerce volumes and appetite for growth-acquisitions make it an interesting IPO play.

Mobile Premier League (MPL): MPL is one of India’s leading mobile e-sports and gaming platforms which has seen tremendous growth in users. Backed by marquee investors like Sequoia and RTP Global, MPL is planning a 2024 IPO that could value the company at $2.5-3 billion as per media reports. MPL has a unique business model with multiple revenue streams via its free to play games, esports tournaments and live streaming.

However, regulatory uncertainties around real money gaming and competition from Dream11 pose risks. But the access MPL’s IPO provides to India’s rapidly expanding gaming ecosystem makes it a high-potential investment.

FirstCry: FirstCry, operated by BrainBees Solutions, is the leading online retailer for baby and kids products in India. With revenues of approximately ₹700 crore and profitability, FirstCry is planning a 2024 IPO to raise around ₹3,000-4,000 crore at a valuation of $2-3 billion according to media reports. FirstCry has exploited the market opportunity in kids e-commerce through its wide selection, omni-channel presence and private labels strategy.

However, low entry barriers and high competition can impact growth. Also, diversification into new segments needs to be monitored. But given its rare blend of scale, growth and profitability, FirstCry’s IPO valuation may have upside potential.

Delhi Metro Rail Corporation: The Delhi Metro Rail Corporation (DMRC) is expected to launch its highly anticipated IPO in 2024, which could raise ₹10,000 crore or more based on reports. DMRC operates the Delhi Metro which has become an integral part of the city’s transportation infrastructure. The metro’s growing network, rising passenger traffic and property development opportunities provide DMRC strong fundamentals. Its monopolistic position in Delhi NCR makes it an appealing investment proposition.

However, high capital costs pose cash flow risks and passenger traffic remains below pre-Covid levels. But its vital role in relieving urban congestion and the Indian government’s thrust on infrastructure spending make DMRC’s IPO interesting.

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These are just some of the high-profile IPOs investors should watch out for in 2024. Other upcoming IPOs on the radar include:

Snapdeal: The leading value e-commerce platform is planning a 2024 IPO to raise over ₹1,200 crore. Snapdeal has made a strong recovery under CEO Kunal Bahl and is profitable. Its IPO will give investors access to India’s thrifty e-commerce segment. However, Snapdeal lags competition in terms of popularity and brand power. Its focus on profitable growth remains untested. But its turnaround makes Snapdeal’s IPO a contrarian bet.

Pharmeasy: This leading online pharmacy startup is targeting a ₹6000 crore IPO in 2024 to expand user reach and supply chain. Pharmeasy provides medications, diagnostics and e-consultation services. However, it is yet to turn profitable and has significant losses. But its vast scale and network makes it poised for growth once unit economics improve.

Mobile Premier League: The popular mobile gaming platform MPL is planning a 2024 IPO valued at $2.5-3 billion. MPL has multiple revenue streams via esports, streaming and skill games. However, regulatory roadblocks on real money gaming dampens its prospects. But India’s booming gaming sector makes this IPO appealing for high risk investors.

Navi Mutual Fund: Backed by tech entrepreneur Sachin Bansal, Navi Mutual Fund has filed draft papers for a ₹500 crore IPO likely in mid-2024. Investors can gain exposure to the asset management sector through this niche, technology-focused mutual fund. However, Navi AMC’s size and AUM remain small compared to larger players. But its fast growth and adoption of tech makes it an interesting play.

Lendingkart: The fintech lender for SMEs is aiming for a $300-400 million listing in late 2024 to enhance its lending book. Lendingkart is profitable and has disbursed over ₹7,000 crore loans to date. However, fintech regulation remains ambiguous and bad loans are a concern in SME lending. But its unique credit underwriting and wide reach make it a compelling fintech play once macro environment improves.

Here are some key factors investors should evaluate when considering IPO opportunities in 2024.

Financial Performance – Analyze past revenue growth, profitability, cash flows and balance sheet strength. Look for a track record of solid financials. Assess operating metrics like product sales, customer acquisition costs, repeat purchase rates and unit economics.

Market Potential – Choose companies exposed to large addressable markets, secular growth trends and volume expansion opportunities. Evaluate TAM, SAM, SOM sizes and growth runway.

Competitive Advantages – Examine sources of competitive advantage like proprietary technology, distribution reach, brand equity, ecosystem control and network effects. Analyze defensibility of business model.

Valuations – Don’t overpay for growth. Evaluate IPO price bands carefully relative to listed peers. Benchmark valuation multiples like P/E, P/B, P/S ratios. Seek reasonable valuations.

Use of Funds – Review how the IPO proceeds will be utilized. Good uses include capacity expansion, new product development, acquisitions and debt reduction. Assess return on capital potential.

Risk Factors – Study all risk factors in detail, especially those related to regulations, corporate governance, lawsuits and compliance. Assess threat from disruptive innovation and competition.

Leadership – Back companies led by experienced, high pedigree founders and professional management. Review promoter track record and performance incentives closely.

Investor-Friendly – Favor IPOs where promoters, PE/VC firms retain some skin in the game post listing. Avoid excessive dilution. Seek listing gains potential.

Beyond financials, also assess qualitative factors like industry dynamics, competitive landscape, growth drivers, management vision, corporate governance practices and risk management when evaluating IPOs.

Investing in IPOs does carry higher risk given the uncertainty around new listings. But the payoff can be rewarding too – many IPOs in 2021 like Zomato, Nykaa have delivered handsome returns for early investors. By carefully selecting the most promising IPO opportunities based on detailed analysis, investors can aim to hold these investments over the long-term to generate wealth.

Here is a perspective on the key trends impacting the IPO environment in 2024:

Favorable Macro Dynamics – India’s growth outperformance, strong domestic consumption, rising start-up activity and flourishing capital markets provide a supportive backdrop for IPOs.

Digital Disruption – Tech-led innovation across sectors is enabling new age companies achieve scale and access public markets for expansion capital.

PE/VC Exits – Private investors will seek exits from mature portfolio companies via IPOs, providing public market entry opportunities.

Retail Investor Appetite – India’s rising base of retail investors has shown keen interest in IPOs of new age companies, ensuring strong oversubscriptions.

Listing Gains – Solid listing pops rewarded IPO investors in 2021, inducing continued demand for popular issuances.

Regulatory Facilitation – SEBI’s procedural easing for IPOs has enabled more companies consider listings. Higher public float requirements also aid pricing.

The Indian IPO market is in the midst of an extended bull run. The strong pipeline of public issues in 2024 offers exciting potential to gain exposure to the country’s new economy leaders while they are still in high growth phases. Savvy investors would be well advised to consider allocating a portion of their portfolio to select, high quality IPOs as we head into the new year.

However, not every IPO is worth investing in. Avoid IPOs with excessive valuations, complex group structures, governance issues or lack of clarity on use of proceeds. Steer clear of IPOs solely aimed at providing investor exits rather than raising capital for growth.

Conclusion:

The meticulous research required for IPO investing will be richly rewarded for those able to spot the most promising debutants. Assess company business models, competitive strengths, growth opportunities and valuations with care. Maintain robust risk management when allocating to IPOs given their inherent volatility. Partnering with a trusted brokerage for IPO financing and allotments is advisable for smooth participation.

With India’s start-up ecosystem thriving and new economy industries gaining prominence, the IPO domain promises exciting opportunities in 2024. Savvy investors who can identify and gain access to the most compelling IPOs could potentially earn outsized returns as the market reaches new heights. By selectively investing in forthcoming public issues backed by promising fundamentals, investors can aim to position their portfolios for the long term capital appreciation India’s high quality issuers have to offer.