IPO India: A Golden Era in the Making or a Storm Brewing?

Synopsis: India’s IPO market exploded in 2025, raising a record Rs 1.6 trillion, outpacing the US and China in volume. SEBI reforms, 200 million retail investors, and 7.3% GDP growth fueled the surge. However, 63% came from promoter exits, not business capital. Yet quality IPOs like Urban Company (61.97% listing gain) and Highway Infrastructure (72.5% gain) proved fundamentals triumph, rewarding selective investors with 30-114% returns while signaling market maturation over speculation.

India’s capital markets are witnessing an unprecedented transformation. In 2025, the country shattered all previous IPO records, emerging as the global leader in listing activity and capital mobilization. With 90+ mainboard IPOs listed and over Rs 1.6 trillion raised through 300+ SME listings, India has positioned itself ahead of the United States and China in terms of IPO volume. But beneath these headline numbers lies a more nuanced story, one that reveals both extraordinary opportunity and structural challenges worth examining.​

The IPO Story: From Quiet Beginnings to Global Leadership

The journey of India’s IPO market is a fascinating study of market evolution and economic transformation. Between 2010 and 2019, India witnessed steady but modest IPO activity, with Rs 2.65 lakh crore raised through 272 IPOs, averaging around Rs 75,000 crore annually. The market saw peaks and troughs, with 2017 marking a particularly strong year at Rs 75,279 crore raised. However, the landscape changed dramatically after 2020.​

The pandemic year of 2020 brought disruption, with only 14 IPOs listed, marking an 80% decline from prior years. Yet remarkably, 71% of these IPOs delivered listing day gains, setting the stage for what was to come. Then came the explosive growth: 2021 saw a surge of 64 IPOs with an astronomical 350% increase in listing day gains, earning it the distinction of being a retail investor boom year. The post-pandemic appetite for capital markets had awakened.​

From 2021 onwards, the momentum accelerated relentlessly. The Indian stock market recovered from pandemic-induced losses, and retail investors discovered the potential of equity investing through simplified digital platforms. By 2024, India achieved a historic milestone: 338 IPO deals, marking a 44% increase from 2023 and raising nearly $21 billion, making it the world’s number one IPO destination by volume. This wasn’t a flash in the pan. It represented a fundamental shift in how capital was being raised in India.​

The Historic Year of 2025: Breaking All Records

The year 2025 has amplified this phenomenon exponentially. According to the latest data, India’s IPO market has raised Rs 1.54 trillion as of early December 2025. The momentum shows no signs of slowing, with five more offerings scheduled for closure by December 16, 2025, including ICICI Prudential Asset Management’s $1.2 billion deal.​

What makes 2025 distinctive isn’t just the volume but the quality and diversity of listings. The year began with a surge in mainboard IPOs, 80 in FY25 (April 2024-March 2025), up from 76 in FY24, alongside venture capital funding climbing to $15 billion from $12.5 billion. Large-cap listings have become increasingly common. HDB Financial Services’ Rs 12,500 crore IPO was eclipsed by Tata Capital’s Rs 17,200 crore offering in October 2025, which became the largest of the year before setting the stage for an even more ambitious pipeline. Recent mega-listings like Meesho (Rs 5,421 crore), Aequs (Rs 921 crore), and Vidya Wires (Rs 300 crore) in December underscore how diverse the fundraising base has become.

Why Are IPOs Booming? Understanding the Drivers

The surge in IPO activity isn’t random. It reflects a convergence of macroeconomic tailwinds, regulatory reforms, and shifting investor behaviour that has created an ideal environment for public market fundraising.

India’s economy remains the fastest-growing major economy globally, with GDP growth expectations at 7.3% for FY26. This sustained growth trajectory provides fertile ground for corporate expansion. Median net profit margins for 2025 IPOs improved to 8.0% from 3.6% in 2024, signalling that companies going public have stronger profitability and healthier business models. This isn’t a speculative bubble driven by irrational exuberance; it’s fundamentally driven by companies with clear paths to profitability tapping efficient capital markets.​

The Securities and Exchange Board of India (SEBI) has been instrumental in democratizing and streamlining the IPO process. In September 2025, SEBI implemented transformative reforms that fundamentally reshaped the IPO landscape. For companies with post-issue market capitalizations above Rs 5 lakh crore, the mandatory public float requirement was halved from 5% to 2.5%, making it easier for large-cap companies to list. Additionally, SEBI extended lock-in period requirements for established companies, allowing greater flexibility for promoter exits while protecting investor interests.​

Earlier reforms in March 2025 improved disclosure standards, requiring companies to disclose key performance indicators that were previously shared only with private investors. This parity of information between public and private investors has enhanced market transparency and investor confidence.​

These regulatory changes have essentially lowered the friction cost of going public, enabling a wider range of companies, from consumer tech startups to industrial manufacturers, to access capital markets efficiently.

Perhaps the most transformative shift has been the rise of retail investor participation. India’s demat account base has surged to approximately 210 million by October 2025, with this growth driven by digital broking platforms offering UPI-based IPO applications. Unlike previous cycles where institutional investors and high-net-worth individuals dominated, today’s market is increasingly driven by small retail investors applying for IPOs through their mobile phones.​

Average QIB (Qualified Institutional Buyers) oversubscription reached 102x, while retail oversubscription averaged 35x in FY25. This data reveals that both institutional and retail segments are equally enthusiastic, creating a balanced and resilient investor base. The success of retail participation is evident in mutual fund flows, where equity inflows reached Rs 24,690 crore in October 2025, with SIPs consistently delivering Rs 29,000+ crore monthly.

Foreign institutional investors (FIIs) have maintained active participation in Indian IPOs despite selling equities in the secondary market. This apparent contradiction, selling some stocks while buying IPOs—reveals a sophisticated strategy: FIIs are willing to fund growth stories at IPO valuations while trimming overvalued secondary market positions. The presence of multinational subsidiaries like Hyundai (which raised $3.3 billion in 2024) and LG Electronics, which demonstrate confidence in the depth of the Indian capital market, has attracted global capital.​

Moreover, expectations of U.S. Federal Reserve rate cuts have redirected investor flows toward emerging markets with stronger growth prospects, with India commanding particular attention. The nation’s macro stability, underpinned by central government continuity and favourable policy support, has made it an attractive destination for long-term capital.​

The Underlying Question: Is This Really Funding Business Growth?

Here lies a critical concern that demands scrutiny. While the IPO fundraising numbers are spectacular, a deeper analysis reveals a troubling pattern: most of this capital isn’t flowing into businesses; it’s flowing to existing shareholders.

In 2025, of the Rs 1.54 lakh crore raised through IPOs, a staggering 63% (Rs 97,059 crore) came from Offer for Sale (OFS) by promoters, not fresh capital infusion. This means only Rs 57,256 crore, roughly one-third of the total, was earmarked for business expansion and growth initiatives. The trend isn’t new. Since 2017, OFS has consistently accounted for 83% of funds raised, while fresh issues contributed only 17%. In extreme cases like 2020, 87% of IPO proceeds came from OFS, with fresh issues accounting for only 13%.​

Major listings, including Tata Capital, LG Electronics, and Lenskart, prominently featured OFS components, signalling promoters’ preference for monetizing stakes rather than channelling funds into business expansion. This structural shift raises a fundamental question: Are IPOs truly fueling business growth and innovation, or are they primarily serving as liquidity events for existing shareholders?​

The implications are significant. If IPOs are predominantly about promoting exit rather than capital deployment, their contribution to economic growth is considerably diminished. Companies cannot scale operations, hire talent, or invest in R&D using funds that are already committed to shareholder payouts. This pattern suggests that while the IPO market is booming in terms of volume and valuations, it may not be translating proportionally into real economic expansion.

Government Support and Policy Tailwinds

India’s government has been instrumental in creating an ecosystem conducive to capital market deepening. Beyond SEBI reforms, broader policy initiatives have supported the IPO boom.

The Startup India initiative, launched in 2016, has created a structured ecosystem supporting over 4,000 startups annually through Rs 960 crore in funding and Rs 828 crore in infrastructure support. The Rs 10,000 crore Fund of Funds scheme managed by SIDBI has channelled capital to venture investors supporting early-stage companies, creating a pipeline of potential IPO candidates. These government schemes have fostered an entrepreneurial ecosystem that eventually graduates to public markets.​

Additionally, foreign direct investment (FDI) has surged, reaching Rs 14,45,781 crore (US$165.1 billion) in the manufacturing sector alone, a 69% increase over the past decade. This FDI, combined with production-linked incentive (PLI) schemes, has bolstered manufacturing capacity and created companies of sufficient scale to warrant IPO consideration.​

The government’s emphasis on digital infrastructure, ease of doing business, and regulatory predictability has also reduced the cost of capital market participation, encouraging younger and smaller companies to access public markets rather than relying solely on private equity.

The Stocks Actively Contributing to Progress

Several Indian companies have emerged as active drivers of the nation’s growth narrative through successful IPOs and subsequent market performance.

• Quadrant Future Tek Ltd. raised Rs 290 crore through a fresh issue in January 2025. The IPO was listed on January 14, priced at Rs 290 per share with a 53.10% listing gain. ​
• Anthem Biosciences Ltd. raised Rs 3,395 crore through an offer for sale in July 2025. Listed on July 21 at Rs 570 per share, the IPO recorded a 28.13% listing gain. 
• GNG Electronics Ltd. raised Rs 460.43 crore through a fresh issue and offer for sale in July 2025. Listed on July 30 at Rs 237 per share, the electronic components manufacturer achieved a 40.67% listing gain. 
• Aditya Infotech Ltd. raised Rs 1,300 crore, combining fresh issue and offer for sale in July 2025. The IT services company was listed on August 5 at Rs 675 per share with an impressive 60.39% listing gain. ​
• Sri Lotus Developers & Realty Ltd. raised Rs 792 crore through a fresh issue in July 2025. The Mumbai-focused real estate developer listed on August 6 at Rs 150 per share with a 30.45% listing gain.
• Highway Infrastructure Ltd. raised Rs 130 crore, combining a fresh issue and an offer for sale in August 2025. The toll road and EPC infrastructure company was listed on August 12 with a remarkable 72.50% listing gain.
• LG Electronics India Ltd. raised Rs 11,607 crore through an offer for sale in October 2025. The largest consumer durables IPO was listed on October 14 at Rs 1,140 per share with a 48.24% listing gain. 
• Billionbrains Garage Ventures Ltd. (Groww) raised Rs 6,632.30 crore, combining fresh issue and offer for sale in November 2025. The fintech investment platform was listed on November 12 at Rs 100 per share with a 31.33% listing gain.​
• PhysicsWallah Ltd raised Rs 3,480 crore, combining fresh issue and offer for sale in November 2025. The edtech company listed on November 18 at Rs 109 per share with a strong 42.42% listing gain. 
• Tenneco Clean Air India Ltd raised Rs 3,600 crore through an offer for sale in November 2025. The emission control systems supplier was listed on November 19 at Rs 397 per share with a 23.63% listing gain. 
• Sudeep Pharma Ltd raised Rs 895 crore, combining fresh issue and offer for sale in November 2025. The pharmaceutical company was listed on November 28 at Rs 593 per share with a 30.55% listing gain.
• Urban Co. Ltd raised Rs 1,900.24 crore, combining fresh issue and offer for sale in September 2025. The home and beauty services marketplace listed on September 17 at Rs 162.25 per share with an impressive 61.97% listing gain.

Is the IPO Boom a Bubble or a Genuine Opportunity?

The answer is nuanced and context-dependent. By several metrics, the IPO boom appears sustainable rather than speculative. Average listing day gains have moderated to 9-12% from earlier peaks of 30%, suggesting sentiment-driven euphoria is giving way to fundamental-driven pricing. About half of the 93 mainboard IPOs in 2025 traded below their issue prices, indicating that markets are discriminating between quality and mediocre listings.​

However, risks are emerging. The SME segment, which comprises nearly three-quarters of all global IPO deals, shows signs of overheating, with valuations beginning to correct in smaller listings. Additionally, the prevalence of OFS over fresh issues means that actual capital infusion into businesses remains limited compared to headline IPO numbers.​

For the boom to be genuinely sustainable, two conditions must be met: companies going public must demonstrate improving profitability and business model strength, which the data partially supports through improved net margins; and IPO capital must increasingly fund business expansion rather than merely facilitating shareholder exits.

The market’s current structure, with strong domestic liquidity from retail investors via SIPs, stable institutional support, and improving corporate fundamentals, provides a resilient foundation. However, the disproportionate focus on OFS over fresh capital raises questions about whether the boom is primarily about wealth transfer rather than wealth creation.

Conclusion

India’s IPO boom in 2025 is undoubtedly real; it’s the world’s leading market by volume, attracting record capital and global attention. The regulatory reforms, retail investor participation, economic growth fundamentals, and government policy support have created an unprecedented opportunity for companies to access capital markets.

However, the boom’s quality depends critically on what happens next. If capital raised through IPOs is predominantly used for promoter exits rather than business expansion, the boom becomes a redistribution event rather than a value-creation phenomenon. For the IPO market to transition from boom to sustainable growth engine, companies must demonstrate that IPO proceeds translate into tangible business expansion, market share gains, and innovation. Additionally, policymakers must monitor valuation excesses in the SME segment to prevent speculative bubbles that could damage retail investor confidence.

The data suggests India’s IPO market is transitioning from speculative excess to fundamental-driven growth. With the structural support from government policies, improving corporate profitability, and deepening market participation, the IPO boom appears poised to continue. Yet cautious optimism remains warranted. The next 18 months will be crucial in determining whether this boom evolves into a sustained capital market renaissance or a cycle that eventually corrects.​

For investors, the message is clear: India’s capital markets offer genuine opportunity, but selective stock-picking based on business fundamentals remains more important than indiscriminate IPO chasing. The boom is real. The bounce is sustained. But not every new listing will deliver returns.

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