IPO Market Overview
India's IPO market is currently experiencing a transformative phase, with the country emerging as a top global destination for IPOs. In 2025, India secured
the fourth position worldwide in IPO activity, having generated nearly $16 billion across over 300 listings. Within Asia, only Hong Kong and mainland China surpassed these figures. Saurabh Dinakar, from Morgan Stanley, foresees record-breaking IPO proceeds in 2026. This surge is reminiscent of China's economic rise from 10 to 15 years ago, propelled by a growing middle class and increased internet penetration. Regulatory adjustments, such as streamlining the listing process for major private companies and easing lending restrictions related to IPOs, have provided a favorable environment. New sectors like fintech and renewables are being introduced through IPOs, adding to market expansion. India also ranks third globally in unicorn companies, with over 90 private firms valued at over $1 billion, just behind the US and China.
Domestic Investor Power
The remarkable growth in India's IPO market is largely fueled by significant investment from domestic sources. According to Divya Agrawal of Motilal Oswal Financial Services, the surge reflects deep local liquidity, with both retail and institutional investors anchoring demand. Retail investors' enthusiasm continues to drive oversubscriptions, supported by expanding digital access. Domestic mutual funds and insurers have become dominant institutional anchors, often leading QIB books despite selective foreign flows. The availability of trading applications and widespread investment education content has attracted many first-time market participants. Conservative investors are contributing billions through systematic investment plans into domestic mutual funds, within a market where the benchmark index is approaching its tenth consecutive yearly gain. Exchange data shows that domestic institutional investors have increased their ownership in over 2,000 NSE-listed companies to 19.2% as of June, reaching a 25-year high. Conversely, foreign portfolio investors' holdings have fallen to 17.3%, the lowest in over a decade.
IPO Performance & Returns
Indian IPOs have proven particularly lucrative for investors, delivering an average weighted return of 18% this year, outpacing the NSE Nifty 50 Index's 9.7% increase. This growth is especially significant given the approximately $16 billion in foreign outflows from the market. Domestic investors, mainly mutual funds and insurance companies, have offset this by investing over $70 billion. Vivek Toshniwal of Plutus Wealth Management noted the unprecedented euphoria, with roadshows happening frequently. Narendra Solanki from Anand Rathi Share and Stock Brokers anticipates 2025 could surpass the previous year in both the number and amount raised in primary markets, driven by high investor enthusiasm. Anticipated significant offerings in the next 24 months include Reliance Jio Infocomm Ltd., National Stock Exchange of India Ltd., and Flipkart India Pvt. supported by Walmart, alongside other listings like PhonePe Ltd. and SBI Funds Management Ltd. Data from Prime Database also indicates a strong preference for domestic investors, who have invested Rs 979 billion rupees in IPOs since the start of 2024, compared to foreign funds' contribution of Rs 790 billion.
Concerns and Challenges
While the market is buoyant, concerns persist. Some companies show inflated valuations, and smaller IPOs see oversubscription rates exceeding 100 times, indicating potential market adjustments. The Bloomberg report highlighted the possibility of market corrections that might negatively affect retail investors. Recent data reveals diminishing short-term gains from main board IPOs, with the median one-month post-listing return dropping to 2.9% this year, compared to 22% the prior year. Despite the overall positive IPO performance this year, data from Bloomberg discloses that roughly half of the listings across primary and secondary boards have fallen below their initial offering price. The underperformers primarily include companies with fundraisings under $100 million. Pratik Loonker from Axis Capital also points out that the inappropriate valuation of IPOs could potentially destabilize current market conditions. Vinod Nair, Head of Research at Geojit Investments Limited, notes the sustained interest from domestic investors, which is in spite of the underperformance of the secondary market over the past 12-13 months, as well as the lower listing gains from recent IPOs.
Specific IPO Successes
The LG Electronics India IPO saw an exceptionally rapid oversubscription, drawing significant attention. The $1.3 billion IPO was oversubscribed within just 6.5 hours, marking the quickest oversubscription in over 17 years among major IPOs in the Indian market. The company achieved subscriptions of $200 million per hour, with domestic participants accounting for 60% of total bids during the three-day subscription period. Lenskart Solutions Ltd. also experienced strong demand during its first day of subscription, particularly from institutional and individual investors. The IPO, valued at Rs 7,278 crore, received bids for 11,22,94,482 shares, exceeding the available 9,97,61,257 shares, and reaching a subscription rate of 1.13 times. The LG Electronics India IPO underscores the high demand, having seen its shares increase by 48% on debut, showcasing the confidence of investors.
