India’s Bull Run Shifts into a Steady Gallop: The Future of IPOs

India’s financial landscape is undergoing a transformative phase, with the stock market’s bull run evolving into a steady gallop. Projections indicate that public issues could surpass ₹1.5 lakh crore by 2025, driven by a robust legal and regulatory framework, proactive reforms from the Securities and Exchange Board of India (SEBI), sectoral policies, and an evolving technological landscape. However, stakeholders must navigate challenges such as regulatory compliance and global market volatility to harness this growth effectively.

1. The Rise of Mega IPOs and the Bull Run: A Sprint or a Marathon?

The year 2024 marked a significant milestone for India’s IPO market, with over 298 IPOs raising ₹1.4 lakh crore. The energy and manufacturing sectors led this surge, showcasing a notable rise in mega-IPOs, particularly in renewable energy and technology. The small and medium enterprises (SME) IPO space also flourished, exemplified by KP Green Engineering Limited’s impressive ₹189.5 crore offering at the year’s start. Over the past five years, more than 250 SMEs have collectively raised ₹9,500 crore, highlighting the increasing reliance on IPOs for expansion.

According to SEBI’s Annual Report for 2023-24, equity issuances reached a record high in the first half of 2024, with over ₹2.32 lakh crore raised—a staggering 198% increase compared to the same period in 2023. This surge is attributed to heightened investor interest and India’s rapid economic growth, a trend that industry experts predict will continue in the short term.

The renewable energy sector has been a significant contributor to this boom. SEBI’s staggered implementation of Environmental, Social, and Governance (ESG) norms has not deterred investor enthusiasm for sustainability. The successful IPOs of NTPC Green Energy and Waree Energies underscore the growing investor interest in sustainable ventures, aligning with India’s ambitious target of achieving 500 GW of renewable capacity by 2030.

The year 2024 also marked a turning point for large-cap IPOs, with notable launches like NTPC Green Energy, Hyundai, and Swiggy. These developments signal not only the market’s resilience but also its evolving focus on sustainability and policy-driven sectors. Looking ahead to 2025, the anticipated IPO of Reliance Jio, India’s largest telecom operator, is expected to exceed ₹7.5 lakh crore in valuation, potentially becoming the largest IPO in Indian history.

2. IPOs: Becoming a Viable Exit Strategy

The favorable market conditions and supportive measures from SEBI have enabled private equity players to leverage the IPO boom for lucrative exits. Firms like Warburg Pincus, TPG, and Blackstone are capitalizing on high valuations in sectors such as technology, healthcare, and renewable energy. For instance, Warburg Pincus is planning a strategic exit from a leading logistics firm, while Blackstone is exploring divestments in India’s commercial real estate projects. TPG is also monetizing its stakes in renewable energy ventures, driven by the growing interest in ESG-aligned portfolios.

3. The Enhancement of the IPO Process with SEBI’s Evolving Regulatory Measures

As the IPO market heats up, SEBI has introduced key reforms to enhance transparency, streamline approvals, and protect investor interests. These measures contribute to a sustained market environment, helping maintain confidence in the public issue process. In 2024, SEBI mandated several disclosures to ensure greater accountability between promoters, investors, and affiliated entities.

Notable reforms include:

• Amendments to Bankers to an Issue Regulations: Updated norms streamline services like escrow and IPO accounts, strengthening the public issue process.

• Faster Approvals with AI: The integration of AI and machine learning has reduced IPO clearance timelines from 75 days to under 45 days in some cases, enhancing regulatory compliance efficiency.

• Pricing and Valuation Checks: Proactive checks on IPO pricing help prevent inflated valuations, particularly in the startup ecosystem, thereby enhancing long-term investor confidence.

• Anchor Investor Norms: Updated norms on anchor investor lock-in periods ensure price stability, protecting retail investors during the post-IPO phase.
• Amendments to SME IPO Disclosure Norms: SEBI’s enhancements for SMEs aim to increase minimum application sizes and profitability requirements, further safeguarding investors.

4. Challenges and Further Regulatory Changes

Despite the optimistic outlook for 2025, navigating the complexities of compliance will be crucial. Companies will face stringent regulatory scrutiny on financial reporting, governance, and promoter eligibility. SEBI’s requirements for detailed disclosures and book-building processes may cause delays, particularly for startups and smaller firms.

Stock exchanges, particularly the National Stock Exchange (NSE), are playing a more active role in compliance. The NSE’s electronic IPO platform mandates issuers to file detailed compliance documents, enhancing regulatory oversight and fostering transparency. While these additional layers of procedural complexity can be challenging, they ultimately enhance the integrity of the IPO process.

Conclusion

India’s IPO market is poised for significant growth in 2025. Despite temporary market fluctuations, the country’s strong economic momentum, regulatory rigor, and growth across various sectors—from traditional industries to cutting-edge technologies—ensure that the appetite for Indian equity has never been greater. As the landscape evolves, both large-cap and mid-cap IPOs will play a crucial role in shaping the future of India’s capital markets, making them a focal point on both global and national agendas.