India's initial public offering (IPO) market has stalled as companies postpone their share sale plans amid falling stock prices, deteriorating investor sentiment, declining grey market premiums and underperforming recently listed stocks, especially high-profile ones such as Swiggy and Mobikwik.
Out of the 44 companies that have obtained Securities and Exchange Board of India (SEBI) approval for their IPOs, most have pushed plans to the next quarter. Some are even contemplating reduced valuations and smaller issue sizes.
Data from primedatabase.com shows that, in January 2025, only six companies raised about Rs4,845 crore through public issues, a significant drop from December when 15 companies raised Rs25,500 crore. February witnessed three companies raising Rs10,900 crore, with Hexaware Technologies contributing about Rs8,750 crore. For March, a few smaller IPOs are scheduled, though bankers express uncertainty about their launch.
Bankers attribute the postponement of IPO plans to the poor response from retail investors and high-net-worth individuals. This trend was apparent in two of this year's largest IPOs—Hexaware Technologies and Dr Agarwal's Health Care—which remained undersubscribed except for allocations to qualified institutional buyers (QIBs).
All four recent IPOs achieved full subscriptions only on the final day. Moreover, 41 out of 91 newly listed companies in 2024 are trading below their issue prices.
Retail and high-net-worth investors have been avoiding new IPOs after experiencing losses. Consequently, issuers may need to wait for market sentiment to improve, with issue sizes and valuation multiples likely to decline in the short term.
Market sentiment has deteriorated due to persistent selling by foreign portfolio investors (FPIs) since October last year, exceeding Rs2.7 lakh crore. Since 1st October, the NIFTY has fallen about 13%, while the Nifty Midcap 150 and Nifty Smallcap 250 indices have declined by 18% and 22%, respectively.
In 2024, the average time between SEBI approval and IPO launch was 52 days, excluding five issues. The Rs3,000-crore public issue of India's largest securities depository, NSDL, has yet to be launched despite receiving SEBI approval on 30 September 2024.
The substantial value erosion in the secondary market has affected institutional investors' net asset values. Fund managers have become more inwardly focused on their existing portfolios rather than making fresh investments, impacting both IPO markets and fresh funding sources like QIPs. Industry experts anticipate that stocks may be entering an oversold zone, potentially leading to a revival in the fund-raising market within the next four to six months.
Some companies that secured SEBI approval in 2023 are yet to launch their IPOs, reflecting the cautious stance of promoters and investment bankers. Among them, high-profile names such as Schloss Bangalore (Rs5,000 crore), Ather Energy (Rs4,500 crore), Avanse Financial (Rs3,500 crore), NSDL (Rs3,000 crore), and Manjushree Technopack (Rs3,000 crore) have put their listings on hold, likely awaiting more favourable market conditions.
Smaller-sized IPOs, such as Kalpataru (Rs1,590 crore), Asirvad Microfin (Rs1,500 crore) and Belstar Microfin (Rs1,300 crore), have also been deferred.
Companies that received SEBI approval before December and missed the 12 February 2025 deadline to launch their public issues with September financials now face additional challenges. Only those with urgent funding needs or seeking to provide exits to existing investors are likely to proceed with IPOs under current market conditions.
Bankers anticipate a recovery in the second half of the calendar year, with a record number of public issues expected. In addition to the 44 companies that have already received SEBI approval, around 70 have filed draft prospectuses and are awaiting clearance.
At least six major IPOs with issue sizes exceeding Rs10,000 crore—including Tata Capital, HDB Financials, LG Electronics India, Lenskart, and PhonePe—are slated to enter the market in the second half of 2025.
