Promoters lost Rs 47,370 crore due to market correction

Promoters and founders in India gained a total of Rs 5 lakh crore in wealth over the past two years due to a boom in initial public offerings (IPOs). There were 169 public offers on the National Stock Exchange (NSE) in the fiscal years 2023 and 2024. The banking and financial services sector led this growth, generating Rs 51,352 crore. Healthcare and pharmaceutical companies followed with Rs 10,641 crore. On average, each founder raised about Rs 8.08 crore through these IPOs, holding around Rs 5.1 lakh crore in equity now. However, a recent market correction caused a loss of Rs 47,370 crore in promoter wealth within six months. Each founder experienced an average loss of Rs 280 crore. This downturn was driven by foreign investor withdrawals and liquidity issues, with investors taking out over Rs 2 lakh crore amid rising interest rates in the U.S. and tighter monetary policies by the Reserve Bank of India. Experts suggest this market decline could negatively affect new IPOs, especially those priced above fair value. In a strong market, stock valuations go unchallenged, but times of correction turn focus back to company fundamentals. Nevertheless, there is hope for fairly priced IPOs. Analysts believe these will still attract interest from institutional, high-net-worth, and retail investors. The outlook remains optimistic for medium-term IPOs, as there is ongoing demand for investment opportunities that provide good returns.