India's IPO market eyes a breakout after months of silence—will FY26 turn the tide?

Over the past couple of months, many companies—including LG Electronics India, National Securities Depository Ltd (NSDL), and JSW Cement—have delayed or paused their initial public offering (IPO) plans due to sustained market volatility, weak investor sentiment, and unfavourable valuations. The primary market has experienced a brief hiatus with no new mainboard public offering since February 14, 2025, when the Quality Power IPO opened for subscription. Notably, not a single mainboard IPO has been launched after that, marking a complete standstill in primary market activity, which was last witnessed in May 2023.

Activity in the Indian primary market started off as a trickle in 2025, with just 10 mainboard IPOs making their debut on domestic bourses in the first two months, raising a total of ₹15,983 crore. The poor performance of listed peers amid sharp volatility in the secondary market, influenced by domestic and global uncertainties, including U.S. tariffs, weak corporate earnings, and lower-than-expected economic growth, prompted companies to defer listing plans.

According to industry experts, postponing or withdrawing a planned IPO is a very difficult decision, and no company makes this choice without serious consideration. It is seen as a weighty decision with potential long-term consequences, including making a future attempt at going public more complicated.

“While filings and approvals are unaffected by market conditions, IPO launches are dependent on sentiment,” says Pranav Haldea, Managing Director of PRIME Database Group, a leading provider of data on the capital markets.

"An IPO is a critical, one-time event, making perfect timing essential. Companies aim for peak market conditions to maximise their value. However, the recent market correction, particularly affecting small and mid-sized businesses, is forcing many to reconsider their IPO plans or accept reduced valuations," he explains.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, says that the IPO market is directly correlated to the performance of the secondary market. “During bullish markets, the IPO market also does well and vice versa. The sharp correction in the Nifty from the peak of 26,277 in September 2024 impacted sentiment in the IPO market too.” 

The BSE IPO index delivered a negative return of 18% in CY25 as compared to a 2% rise in the BSE Sensex, while the BSE MidCap and BSE SmallCap indices declined nearly 8% and 14%, respectively, during the period under review.  

According to Bajaj Broking Research, the slowdown in the IPO market has been impacted by market volatility, tighter liquidity, regulatory scrutiny, and cautious investor sentiment. “High bond yields, global uncertainties, and concerns over valuations have made companies delay listings despite receiving Sebi approvals,” the brokerage said in a note.

“Over the next 12–18 months, a revival is likely if interest rates ease, market volatility reduces, and corporate earnings remain strong. Stricter Sebi regulations have increased transparency but also extended IPO preparation timelines, prompting companies to carefully plan their market entry,” it added.

Will FY26 mark the end of the IPO drought?

The pause in the primary market is set to end soon as a flurry of companies are gearing up to hit D-Street, driven by increasingly accommodative monetary policies and supportive market conditions. The Indian equity market staged a remarkable recovery in March and the uptrend continued in April, rebounding from a prolonged sell-off that began in October 2024, amid bargain hunting by investors at more reasonable levels.

Ather Energy is the first mainboard company to launch its IPO in FY26, which opened for subscription between April 28-30, and shares are expected to make their debut on the BSE and the NSE on May 6.

The Bengaluru-headquartered pure-play EV company has trimmed its IPO size to ₹2,981 crore as compared to earlier estimates of ₹4,000 crore, while valuation has been lowered to ₹12,000 crore, from ₹14,000 crore projected earlier. This is attributed to fragile market conditions and weak investor appetite.

The IPO, having a price band of ₹304-321 per share, received a muted response from investors, with the issue fully subscribing on the final day of bidding after qualified institutional buyers (QIBs) came to rescue in the last few hours. The IPO was booked 1.5 times as investors applied for 76.7 million equity shares worth ₹2,463.65 crore (at the upper end of the price band), as compared to the offer size of 51.1 million shares. The issue was booked 0.17% on Day 1 and 30% on Day 2.

Data showed that the quota reserved for retail investors was booked 1.89 times, followed by 1.76 times for QIBs. Meanwhile, the non-institutional investors (NIIs) portion failed to fully subscribe as the quota reserved for them was booked just 69%. On the other hand, the Employee’s quota segment was the most aggressive as that window was subscribed nearly 5.43 times.

Surge in draft IPO paper filings continues

Despite the ongoing dry spell in the primary market, preparations for equity fundraising remain in full swing, with as many as 72 companies filing their Draft Red Herring Prospectuses (DRHP) so far with capital market regulator Sebi in calendar year 2025 (till April 22). At the same time, 36 companies have received the regulator’s approval to launch their public issues.

The pipeline remains strong as 58 companies proposing to raise around ₹1 lakh crore have Sebi’s approval and are waiting to hit the market, while another 72 companies looking to garner about ₹1.12 lakh crore are awaiting the green signal from the regulator, according to PRIME Database.

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