The Current State of IPOs in India: A Cautious Outlook

In recent months, the Indian Initial Public Offering (IPO) landscape has faced significant challenges, leading to the postponement of at least two major IPOs worth a combined $759 million. This trend reflects a broader hesitation among companies to pursue public listings amid weak investment sentiment and global uncertainties.

Companies Postponing IPO Plans

Among the notable companies delaying their IPOs are Avanse Financial Services, an education loan provider, and Anthem Biosciences, a contract drug manufacturer. These firms join a growing list of companies, including the Indian unit of South Korean conglomerate LG Electronics, that have opted to hold off on their IPO plans. Investment bankers attribute this trend to a lack of interest from institutional investors, who are currently cautious due to geopolitical tensions, particularly between India and Pakistan.

Suraj Krishnaswamy, managing director of investment banking at Axis Capital, noted that only select institutional investors are participating in the market at this time. The ongoing global uncertainties have created a challenging environment for capital raising, prompting many companies to reconsider their strategies.

Geopolitical Tensions and Economic Outlook

The decision to delay IPOs is indicative of the broader economic climate, which has been clouded by global trade frictions and geopolitical tensions. These factors have not only affected investor sentiment but have also led to fears of a potential recession. As a result, many companies are choosing to postpone their capital-raising efforts until the market stabilizes.

On May 6, 2025, the market debut of Ather Energy, an electric scooter manufacturer, will serve as a litmus test for investor appetite in the current climate. Early trading indicates a muted response, with shares fluctuating around the issue price of ₹321 ($3.81).

Regulatory Challenges

The situation is further complicated by regulatory factors. According to Pranav Haldea, managing director of PRIME Database Group, as many as 58 companies with Indian regulatory clearance have yet to launch their IPOs. The expiration of these clearances in the coming months may force companies to either restart the IPO process or seek extensions from India’s market regulator.

Declining IPO Activity

India, which was the world’s second-largest IPO market last year, has seen a staggering 58% decline in IPOs listed on main stock exchanges in 2025. Total fundraising across all listing platforms has dropped by 18%, according to data from LSEG. This downturn highlights the challenges facing companies looking to go public in a volatile market.

Cautious Investors

Retail investors, having experienced significant losses due to market fluctuations, are adopting a more cautious approach to new investments. This has resulted in a lukewarm reception for this year’s IPOs. Ather Energy, despite moving forward with its $352 million IPO, had to reduce its target valuation by 44% and lower its offer size, although the IPO was fully subscribed.

Strategic Adjustments for IPO Clients

Given the unpredictable market environment, investment bankers are advising their clients to adjust their IPO strategies. Bhavesh Shah, managing director and head of investment banking at Equirus, emphasized the need for companies to reconsider their valuations. If the issue is deemed important, companies may need to adjust their valuation expectations or delay their IPOs until market conditions improve.

Conclusion

The current state of IPOs in India reflects a cautious sentiment among companies and investors alike. With geopolitical tensions and economic uncertainties looming large, many firms are opting to delay their public offerings. As the market continues to evolve, the upcoming IPOs, particularly that of Ather Energy, will be closely watched as indicators of investor confidence and market stability. The path forward will require careful navigation and strategic adjustments to align with the prevailing economic landscape.