Indian IPO Market: A Promising Start to 2025
As 2025 unfolds, the Indian initial public offering (IPO) market is off to a robust start, with issuance levels poised to potentially surpass last year’s impressive figures. Despite the equity volatility that has characterized the market since September 2024, optimism remains high among equity capital market professionals, fueled by a strong pipeline of upcoming deals.
A Strong Performance in 2024
In 2024, India emerged as the world’s second-largest market for new listings by volume, raising approximately USD 21 billion, trailing only the United States, which garnered USD 41.6 billion. This impressive performance has set a hopeful tone for 2025, as the current year has already seen Indian IPO volume reach USD 888 million from 26 deals. This figure represents a 4% increase compared to the same period in 2024, although the number of deals has decreased from 32 to 26, according to Dealogic data.
The Nifty 50 Index, a key benchmark for Indian equities, has also shown resilience, edging up 0.7% year-to-date and gaining 9% over the past year. However, it remains 9.4% below its record high reached in September 2024, primarily due to corporate earnings not keeping pace with elevated equity valuations, which has led to a retreat of foreign investors.
Optimism Amidst Challenges
Despite the short-term shocks in foreign institutional investor flows, industry experts remain optimistic about the Indian equity market. Utkarsh Sinha, Managing Director at Bexley Advisors, noted that many global allocators continue to view Indian equities favorably, particularly in light of China’s adversarial positioning in the eyes of capital allocators. This sentiment is further bolstered by the unprecedented participation of Indian retail investors, facilitated by platforms like the Unified Payments Interface (UPI), which have democratized access to IPOs.
Economic Resilience and Tariff Concerns
While concerns linger regarding U.S. tariffs under President Donald Trump, which could impact India’s exports—valued at USD 77.52 billion in FY24—experts like Ravi Dharamshi, founder and Chief Investment Officer of ValueQuest Investment Advisors, argue that India’s domestically driven economic model makes it less vulnerable to external shocks. Dharamshi believes that 2025 could see Indian IPO proceeds exceed last year’s figures, citing the country’s robust market depth since the global financial crisis.
Sectoral Insights: Healthcare Leads the Charge
The healthcare sector has emerged as a significant player in the IPO landscape for 2025. Notably, two healthcare IPOs—Dr. Agarwal’s Health Care and Laxmi Dental—accounted for nearly 50% of the total IPO volume so far this year. While Dr. Agarwal’s stock has remained flat, Laxmi Dental has seen a rise of over 15% since its offering.
The healthcare sector is expected to maintain its momentum, with a strong pipeline of listings across various niches, including single-specialty hospitals, multi-specialty hospitals, and pharmaceutical firms. For instance, Anthem Biosciences has filed its draft red herring prospectus for a USD 397 million IPO, indicating continued interest in this sector.
A Diverse IPO Pipeline
Beyond healthcare, the IPO pipeline for 2025 is diverse, featuring major foreign companies’ local operations, such as LG Electronics India and PayU, alongside Indian heavyweights like fintech Pine Labs and renewable energy developer Hero Future Energies. The much-anticipated IPO of Reliance Jio Infocomm is also on the horizon, with expected proceeds of USD 4.08 billion.
Sinha highlights a trend of "homecoming" for many Indian companies that previously sought listings abroad, now recognizing the depth and rewards of the Indian capital markets. This shift could further enhance the IPO landscape in the coming months.
Financial Services and Technology: Future Growth Areas
The technology sector, particularly those driven by artificial intelligence, is expected to see a surge in IPO activity this year. The Indian government’s recent budget, which unveiled tax cuts aimed at stimulating discretionary spending, is likely to ignite growth in consumer-facing businesses. Sectors such as financial services and renewables are also anticipated to maintain positive sentiment, contributing to a robust IPO pipeline.
A Booming Environment for ECM Bankers
Equity capital market (ECM) bankers are experiencing a favorable environment, with fees from Indian IPOs reaching approximately USD 291 million last year, second only to the record USD 315 million in 2021. This year, the fee figure stands at USD 19 million, already surpassing the USD 18 million recorded in the same period last year.
Leading the charge in the IPO market is ICICI Bank, which captured an impressive 11% market share last year. This year, Motilal Oswal Financial Services has emerged as a frontrunner, followed closely by GYR Capital Advisors and State Bank of India.
Conclusion
The Indian IPO market is poised for a dynamic year in 2025, with a strong pipeline of deals and a diverse range of sectors contributing to its growth. While challenges remain, the resilience of the Indian economy, coupled with increasing retail participation and a favorable regulatory environment, suggests that this year could indeed surpass last year’s successes. As the market continues to evolve, all eyes will be on the upcoming IPOs and the opportunities they present for investors and companies alike.