The Current State of India’s IPO Market: Trends and Insights
The landscape of initial public offerings (IPOs) in India has undergone significant changes in 2025, marked by a sharp decline in the number of offerings. This downturn, amounting to a staggering 62% drop compared to the previous year, can be attributed to a combination of global and domestic factors that have created a cautious environment for both issuers and investors.
Declining Numbers, Rising Average Issue Size
As of May 2025, only 10 IPOs have successfully raised ₹18,704 crore, a stark contrast to the 27 public issues that garnered ₹24,437 crore during the same period in 2024. Interestingly, while the number of IPOs has plummeted, the average issue size has more than doubled, increasing from ₹905 crore to ₹1,870 crore. Notable IPOs this year include Hexaware Tech, which raised ₹8,750 crore, Dr. Agarwal’s Health Care at ₹3,027 crore, and Ather Energy at ₹2,981 crore.
Post-Listing Performance: A Cautionary Tale
Despite the substantial amounts raised, many IPOs have struggled post-listing. At least six companies, including Ather Energy and Quality Power, are currently trading below their issue prices. Some, like Indo Farm and Stallion India, have seen their shares plummet by more than 38% from their initial offering prices. This disappointing performance has instilled caution among retail and institutional investors, leading many companies to delay their planned issuances, even after receiving approvals from the Securities and Exchange Board of India (SEBI).
Investor Sentiment: Navigating Uncertainties
Investor sentiment has been heavily influenced by uncertainties surrounding tariffs and geopolitical tensions. Although recent developments, such as a ceasefire announcement between India and Pakistan, have eased some geopolitical concerns, worries about U.S. tariffs under President Donald Trump continue to loom large. This environment of uncertainty has made investors hesitant, prompting many to adopt a wait-and-see approach.
Optimism Amidst Caution
Despite the current challenges, market experts remain optimistic about the future of the IPO market. Some institutional investors are making significant bets on private companies, anticipating lucrative returns from future listings. Lakshmi Iyer, CEO of investments and strategies at Kotak Alternate Asset Managers, notes a growing interest in private companies among portfolio management funds and alternative investment funds. Iyer is bullish on equity markets and is actively buying during market dips.
A Strong IPO Pipeline
The IPO pipeline remains robust, with approximately 80 companies having filed draft prospectuses, and about half of these receiving approvals from SEBI. The most active sectors for upcoming IPOs include industrials, real estate, life sciences, hospitality, and construction. This diversity in sectoral representation indicates a potential rebound in the IPO market, provided macroeconomic conditions stabilize.
Stellar Performances from Previous Year
The previous year saw some IPOs delivering exceptional returns, with Jyoti CNC Automation yielding over 150% and Bharti Hexacon exceeding 100%. Large listings, such as Hexaware Technologies and Hyundai Motors, which raised billions, positioned India as a leading player in the global IPO market. The record-setting IPOs of 2024 were largely fueled by substantial participation from domestic investors, highlighting the appetite for quality offerings.
Competitive Landscape
There is intense competition between institutional and retail investors for IPOs that present value. Nikhil Rungta, co-chief investment officer at LIC Mutual Fund, emphasizes the growing rivalry in the market, particularly for offerings that promise strong returns. This competitive landscape is indicative of the underlying demand for quality investments, even amidst current uncertainties.
Looking Ahead: A Potential Revival
Both analysts and institutional investors express optimism for a revival in the IPO market over the next six to twelve months. This optimism is bolstered by expectations of interest rate cuts, reduced market volatility, and strong corporate earnings. While India’s economic fundamentals remain robust, there is a caveat: the strong corporate earnings may already be priced into the markets, which could temper future growth.
In conclusion, while the current state of India’s IPO market presents challenges, the underlying factors suggest a potential rebound. The diverse issuance pipeline, continued interest from domestic and foreign investors, and a stabilizing macroeconomic environment could pave the way for a revitalized IPO landscape in the near future.