Business-to-business (B2B) and manufacturing technology sectors constituted 56% of the new listings on the mainboard over the last five years, Boston Consulting Group and venture capital firm Matrix Partners said in a joint report.
According to the latest ‘Digitizing Make in India’ report, within the B2B space, there had been 11 initial public offerings in the past five years in the specialty chemical industry, featuring companies such as Chemplast and Senmar.
IPOs were also observed in sectors such as electronic manufacturing services (EMS), electronic equipment, auto parts and related industries, as well in aerospace and defence.
“The IPO markets want profitable companies with good return on capital employed that are growing rapidly in segments with high demand and are considered sunrise sectors. We have seen a lot of EMS companies getting funded and a lot of companies in the precision manufacturing-led defence component and renewable energy space getting funded, and we will see a lot more,” Sudipto Sannigrahi, managing director at Matrix Partners, told ET.
There will be a significant increase in IPOs within the electric vehicle (EV) sector, beginning with Ola Electric. “But you will also see a lot of (IPOs from) OEMs (original equipment manufacturers), motor companies, charging infrastructure companies and battery companies. That will be a big trend,” he said.
In December, Ola Electric filed its draft red herring prospectus for an IPO with the Securities and Exchange Board of India. The electric scooter manufacturer aims to raise up to Rs 5,500 crore through a fresh issue of shares. Besides, its existing investors plan to sell 95.2 million shares though the IPO.
According to Sannigrahi, more than $1 billion had been invested in B2B ecommerce companies last year. Therefore, the sector is expected to remain robust. “Increasingly, we will also get more funding in areas where we did not see that much amount of funding,” he said, referring to semiconductors, EMS, EVs, renewable energy, drones and space.
India is expected to rank as the world’s third-largest economy by 2030, fuelled by significant growth in sectors such as semiconductor, electronics manufacturing, EV, renewable energy and defence. According to the report, the projected end-market value for electronics is estimated to reach $500 billion by 2030, with semiconductors expected to constitute a $120 billion market.
“Most of the semiconductor consumption will essentially be for edge inferencing for smartphones, and not necessarily for replacing the 800 graphics processing units (GPUs) that Nvidia builds. But all of these use cases will have an element of artificial intelligence to it … However, where we see there’s a big push for AI in India, today that’s at the LLM (large language model) and application layer,” Sannigrahi said.
Minister of state for electronics and IT Rajeev Chandrasekhar said on Monday that India will develop its own foundational models in AI.
Non-banking financial companies (NBFCs) are also expected to experience a compound annual growth rate of 19% from 2021 to 2026. This growth is driven by strong demand for credit among micro, small, and medium enterprises, following the Covid-19 pandemic. NBFCs are fulfilling this demand through innovative embedded finance solutions, supported by strong policy, the report said.
The report highlighted India’s export potential, which is expected to grow to $2 trillion by 2030 and would make up about a quarter of its GDP. This growth will be driven by an emphasis on manufacturing, it said.
In an interview with PTI, Goyal said the government recognises the need for a vibrant EV ecosystem as greater use of battery-run vehicles will cut carbon emissions as well as the staggering oil import bill. But for this, it will not tailor policies that suit any one company and would rather frame ones that will encourage all-electric vehicle manufacturers from across the world to set up shop in India, he said.
