India's Stock Market Attracts Competition from Consumer Companies

• Companies are increasingly considering going public in India's thriving stock market and robust economy.
• LGT Wealth India CEO Atul Singh stated that India's growth story will be driven by private consumption as it is set to become the world's third-largest consumer market by 2027.

Food delivery platforms, jewelry companies — and even a electric scooter manufacturer.

Companies are increasingly considering going public in India's thriving stock market and robust economy.

LSEG data shows that India's benchmark indexes reached new record highs in 2021, with the and rising 19% and 17%, respectively.

By 2027, the South Asian country will become the world's third-largest consumer market, thanks to the robust growth of consumer-focused companies in various sectors, including healthcare, transportation, and consumer staples, as predicted in a BMI report.

LGT Wealth India CEO Atul Singh stated that after a decade, India's growth story is likely to be driven by private consumption, as the risk appetite for investors for business-to-consumer companies has increased with a better macro outlook.

After more than a decade, private consumption is making a comeback. This trend may have begun with large corporations like Amazon and Alibaba, but the positive macroeconomic outlook is attracting more business to consumer companies to list, as Singh explained in an interview with CNBC.

In 2023, India recorded 238 listings, reaching a nine-year high with 614 billion Indian rupees ($7.35 billion), according to FactSet data. Additionally, the research platform revealed that there have already been 264 IPOs this year.

Transportation

Hyundai Motor India is planning to list its IPO and aims to raise $3 billion, surpassing the $2.7 billion listing of Life Insurance Corporations and potentially making it the largest IPO in the country.

Ola Electric's shares surged 20% in its market debut after being listed in August, with the company pricing its shares at 76 rupees (91 cents) and raising over $730 million in its initial public offering.

According to LGT Wealth's Singh, the listing momentum among automakers like Hyundai Motor and Ola Electric is gradually spreading to other sectors of India's economy.

"The initial focus of the consumption narrative was on high-priced items such as cars, but there is a growing trend towards consumer staples. As a result, smaller-ticket consumption is gaining traction," he stated.

Food and beverage

Reports from Reuters indicate that Swiggy, a food delivery platform backed by Softbank, filed for an IPO on Sept. 26.

Its competitor had gone public in 2021, and its shares have surged over 120% year-to-date.

Consumer brands such as Zomato and Swiggy are seeking to raise capital through going public.

Feroze Azeez, deputy CEO of wealth management firm Anand Rathi Wealth, stated that these businesses require capital because they are loss-making companies. Their goal is to go public and expand their market presence without worrying about profitability for the first five years, as told to CNBC.

Zomato, despite being loss-making, has shown that it can become profitable sooner than expected, as evidenced by its profits in the last two quarters.

Jewelry

Indians' love for gold has made jewelry a popular theme for companies going public.

PN Gadgil Jewellers, which is listed on both Indian stock exchanges this month, made a strong debut on the bourses. The company listed at 834 Indian rupees ($9.95) on the Bombay Stock Exchange and 830 Indian rupees ($9.91) on the National Stock Exchange.

This follows the successful listings of other jewelry brands in 2023.

Since the beginning of the year, the shares of and have experienced a 108% and 211% increase respectively.

Gold purchases are expected to increase by 400% during Dhanteras, which falls before Diwali and is considered an auspicious day for buying gold.

Despite rising prices, Indian consumers continue to prefer buying jewelry, with households investing more in physical assets like gold than ever before, according to Anushri Bansal, Asia-Pacific's senior economist at Mastercard.

Bansal stated that there is a tendency to purchase gold for investments, as jewelry, and to pass it down to future generations.

Listings outside consumer-focused sectors

Financial companies are increasingly considering going public in the non-banking sector, beyond consumer-focused sectors.

Bajaj Housing Finance, which offers home loans, went public on September 16. Its shares rose as much as 161 rupees per share on its debut on the National Stock Exchange, increasing approximately 130% from the top end of their IPO pricing of 70 rupees.

Singh, a representative of LGT Wealth, stated that Bajaj Housing has a strong reputation and high-quality management.

"Positive macroeconomic conditions are making financing companies attractive investments and driving a retail craze."