Historic Milestone
India's IPO market celebrated a significant achievement, exceeding 100 listings. This surge hasn't occurred since 2007, marking a pivotal moment in the
nation's financial landscape. The total funds raised reached a record Rs 1.6 lakh crore in 2025, surpassing the previous high set the previous year. This impressive performance highlights the evolution of India's capital markets and its growing stature as a key player in global fundraising. This robust activity demonstrates a significant transformation in the Indian market, signifying its maturity and attractiveness to investors.
Factors Driving Growth
Several factors have propelled the IPO boom. A rising number of retail investors and sustained interest from institutional investors have contributed to the market's strength. Moreover, foreign institutional investors continue to actively participate in IPOs due to India's promising growth prospects and relatively stable policy framework. While they have been selling in the secondary market, they're showing strong interest in the primary market. Mutual funds are also experiencing healthy inflows, with the money from them seeking investment opportunities. This convergence of favorable elements has created an environment conducive to companies across various sectors, like mid-sized manufacturers and tech-driven businesses, accessing capital at favorable valuations.
Changing Dynamics
Despite the impressive growth, the dynamics of the IPO market are evolving. While the number of listings has surged, the returns on listing day have adjusted. The average gains have fallen to 9.4% in 2025, the lowest since 2018. This shift contrasts with the high returns observed in previous years, when 91 IPOs in 2024 generated over 30% returns, and 57 offerings in 2023 yielded approximately 29%. This change signals a more cautious approach from investors and a shift towards more sustainable valuations. As such, investors need to be vigilant.
Future Outlook
The IPO pipeline remains robust, with several major offerings expected. Companies like Jio Platforms, NSE, and Flipkart are potential candidates for substantial share sales. The yearly issuance of $20 billion is projected to become the new normal. Consumer technology and new-age businesses are expected to represent over 30% of IPO demand within the next five years. At present, at least 20 startups with valuations in the hundreds of millions are getting ready to go public. Several companies are preparing for offerings exceeding $1 billion, potentially raising up to $8 billion. This indicates continued momentum and confidence in the Indian market's ability to attract investments.
Valuation Concerns
Valuation plays a critical role in the sustainability of the IPO rally. While the demand for IPOs remains strong, even at the set price, it's essential for valuations to remain reasonable. Excessive valuations can lead to poor investment outcomes. Furthermore, the quality of companies getting listed has significantly improved. A lot of companies are now far more mature than earlier. Investors are advised to remain cautious, acknowledging that while there is excitement, investment decisions should be based on thorough analysis and due diligence. Considering the dynamic market environment is crucial for success.
