Mumbai: To double the country’s gross domestic product (GDP) by 2030 without excessive leverage, India would require an additional equity capitalisation of Rs 2.5 lakh crores annually for the next seven years, as estimated by the Association of Investment Bankers of India (AIBI).
The existing domestic inflows from mutual funds, insurance, pension, PMS, and AIF currently amount to Rs. 3 lakh crores per year. Achieving this target is considered easily attainable, but there is a need for corresponding fresh equity issuances each year to maintain a balance and ensure that the market remains an attractive destination for investors, as suggested by bankers.
“Capital markets will be an enabler in achieving such large investment targets. This current market condition has created an enormous opportunity for inclusive growth and capital availability to a broader spectrum of enterprises and ecosystems,” said Mahavir Lunawat, Chairman of AIBI. “Along with the continuing strong regulatory framework, we should improve the depth and breadth of capital markets so that it provides a win-win opportunity for both users and providers of capital.”
India has emerged as one of the fastest-growing economies, surpassing even China, with an impressive GDP growth rate of 7.3%. According to a report by Morgan Stanley, India’s GDP could double by 2030.
Approximately Rs 1.5 lakh crores of equity funds garnered through IPO and post-IPO transactions. Interestingly, the average Indian IPO multiple in CY23 was 35 as against the related average Industry PE multiple of 63. More than 90% of the new issuances in India during CY23 stand at a premium to the IPO price. In contrast, more than 60% of new entrants are below IPO price in the USA for the same timeframe.
