"As secondary markets continue to be stable and primary markets start doing well, most companies and investors are turning to the IPO route as the most preferred option for generating liquidity," he said. The primary market refers to the part of the capital market that deals with issuance of new securities, while the secondary market is where investors trade previously issued securities.
Another factor driving increased IPO activity is private-equity backed companies capitalizing on the positive market sentiment to provide an exit for their investors, "who have been patient partners waiting for a right window of opportunity," said Bagchi.
Indian companies have raised around $1.03 billion via IPOs so far this year, well above the $282 million for all of last year and $295 million in 2013, according to data from Dealogic.
Activity in the IPO market tends to lag the performance of the broader stock market, which took off in mid-2014 amid optimism that Prime Minister Narendra Modi would able to unlock India's economic potential.
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"During 2013 and 2014, the secondary markets were not doing very well due to various concerns around the Indian economy including high inflation, currency risk, fiscal deficit, and low investor interest," Bagchi said.
"As secondary markets picked up in the second half of calendar year 2014, the primary market activity has kick-started with a lag, and therefore we are seeing higher action now in this space," he said.
While India's equity market has failed to repeat 2014's bumper performance this year (major indices are unchanged year to date), it continues to be among the most favored by emerging market investors given the country's strengthening macro fundamentals. Concerns over the economy as well as cultural tolerance have risen recently, but haven't dented investor sentiment substantially.
This, "paves way for the IPO boom to come back in India," says Jigar Shah, CEO of Maybank Kim Eng Securities.