India’s IPO Market: A Mixed Bag of Activity and Caution

India’s Initial Public Offering (IPO) market has established itself as one of the most active globally, particularly in terms of the number of listings. However, according to the latest EY Global IPO Trends report, it still lags behind the United States and China in total capital raised. In the first half of 2025, India accounted for just 8% of global IPO proceeds, a stark contrast to the 28% captured by the US and 34% by China.

A Snapshot of Recent Activity

In the first six months of 2025, India witnessed 108 companies go public, raising a total of $4.6 billion from capital markets. While these figures may initially appear robust, they represent a 30% year-on-year decline in the number of IPOs. Interestingly, the total funds raised dipped only 2%, indicating that despite a slowdown in activity, the quality and size of the issues remained relatively strong.

Shifting Strategies in the Market

The EY report highlights a notable shift in strategy among both issuers and investors. Companies are becoming increasingly selective about when and how they approach the markets, while investors are gravitating toward firms with solid fundamentals and clear growth trajectories. This trend suggests a preference for fewer, but higher-quality issues, reflecting a more discerning investment landscape.

Global Uncertainty and Its Impact

This cautious sentiment is set against a backdrop of heightened global uncertainty. Geopolitical tensions and fluctuating macroeconomic conditions have made issuers more hesitant, leading several high-profile companies to delay their listing plans or adjust their valuation expectations. The atmosphere of caution is palpable, as both sides of the market navigate these complexities.

Looking Ahead: Potential for Recovery

Despite the current challenges, the second half of 2025 could see a resurgence in IPO activity. EY reports a robust pipeline from sectors such as technology, fintech, and healthcare, with many companies having already received regulatory clearances. These firms are essentially in a holding pattern, ready to launch their IPOs as soon as market conditions become more favorable.

Valuations and Investor Confidence

India’s IPO market continues to trade at a relatively high price-to-earnings ratio of around 27x, comparable to levels seen in the US. This reflects a degree of investor confidence but also places pressure on companies to justify their valuations. The slow start to the year, driven by a mix of global volatility and domestic concerns, has resulted in many deals being postponed.

Signs of Market Recovery

Encouragingly, signs of recovery in market sentiment are beginning to emerge. Retail investor interest in equities remains strong, and the regulatory environment is largely supportive. With macroeconomic indicators showing improvement—particularly in inflation and liquidity—EY anticipates a stronger second half for primary market activities.

A Global Perspective

On a global scale, the IPO landscape has been a mixed bag. The US recorded 109 IPOs, marking the highest first-half count since the 2021 boom, although it raised less money overall. In contrast, China experienced a surge in deal activity, with proceeds rising three-fold due to larger offerings and strong investor appetite.

Maturity of the Indian Market

India’s decline in volume, coupled with steady IPO proceeds, signals a maturing market where investors are prioritizing quality over quantity. Whether this trend will continue depends on how the remainder of 2025 unfolds. EY outlines two potential scenarios: one where improving trade dynamics, easing monetary policy, and geopolitical de-escalation pave the way for a broader recovery in global IPO activity; and another where ongoing macroeconomic stress—such as persistent inflation, interest rate uncertainty, or geopolitical tensions—keeps the market in a wait-and-watch mode.

Conclusion

As India’s IPO market navigates these complexities, both issuers and investors are likely to remain cautious. The focus on quality over quantity may define the landscape for the foreseeable future, making it essential for companies to present compelling cases to justify their valuations. The coming months will be critical in determining whether the market can rebound or if it will continue to tread carefully amid global uncertainties.