Public Sector Becomes a Vital Catalyst for Investment Banks' Growth in India: Report

Synopsis

A new report reveals that the public sector is significantly contributing to the growth of investment banks in India, driven by government divestment strategies and strong domestic investments, with key IPOs and funding activities on the horizon.

Key Takeaways

Public Sector's Role: Crucial for investment banking growth.
Divestment Target: Rs 47,000 crore set for FY26.
Active IPOs: Major PSUs like LIC and ONGC.
Investor Participation: Strong in equity markets.
DIIs Investment: Over Rs 5.7 lakh crore in FY25.

Mumbai, March 20 (NationPress) The public sector is emerging as a significant force in propelling the growth of investment banks in India, bolstered by the government's divestment strategies and robust domestic investments, according to a new report released on Thursday.

The Department of Investment and Public Asset Management (DIPAM) has established a divestment goal of Rs 47,000 crore for FY26, offering considerable prospects for investment banks.

In recent times, initial public offerings (IPOs) of prominent public sector undertakings (PSUs) such as LIC, IREDA, and ONGC, along with offers for sale (OFS) in firms like IRCTC, HAL, and Coal India, have kept the market vibrant, as stated in the report by Emkay Investment Banking.

Future IPOs and fundraising initiatives from Bharat Coking Coal, CMPDI, MNGL, IREDA, and various banks are projected to further stimulate the growth of investment banking in FY26 and beyond.

India's equity markets have consistently experienced strong participation from investors. In 2024, a total of 92 IPOs raised more than Rs 1.62 lakh crore, while Rs 1.36 lakh crore was garnered through qualified institutional placements (QIPs), according to the report.

Moreover, a steady influx from systematic investment plans (SIPs) has provided reliable support to the market, the report noted.

For the last 11 months, SIP inflows have consistently surpassed Rs 20,000 crore, exceeding Rs 25,000 crore in the past five months—an encouraging sign of investor confidence.

Domestic institutional investors (DIIs) have been pivotal in maintaining market stability. In FY25, DIIs invested upwards of Rs 5.7 lakh crore, enhancing market liquidity and investor sentiment.

Meanwhile, critical policy measures from the Reserve Bank of India (RBI) are anticipated to further improve market liquidity and credit expansion.

The expected repo rate reduction, easing of risk weights on NBFC loans, and liquidity initiatives will provide a boost to the financial sector.

Additionally, measures in the Union Budget intended to increase consumption are predicted to generate positive economic momentum, the report concluded.