Retail IPO euphoria fades as oversubscription nearly halves to 57% in FY26

The retail frenzy that once defined India’s initial public offerings (IPOs) market is losing its edge. After years of blockbuster oversubscription and bumper participation, individual investors are stepping back, turning cautious amid secondary market volatility and muted listing performance.

In FY26, retail IPO euphoria faded visibly, with oversubscription nearly halving to 57% from 103% in FY25, indicating a meaningful decline in excess demand.

Retail investors applied for shares worth ₹2.77 lakh crore in FY26, which was 57% higher than the total IPO mobilisation of ₹1.79 lakh crore by 112 companies during the fiscal, according to data shared by PRIME Database Group.

“The value of shares applied for by retail investors at ₹2.77 lakh crore was 57% higher than the total IPO mobilisation, compared to being 103% higher in 2024-25, again showing reduced enthusiasm from retail during the year,” said Pranav Haldea, Managing Director, PRIME Database Group.

However, allocation to retail investors has remained stable despite the cooling participation. Retail investors were allotted shares worth ₹45,006 crore, accounting for 25% of total IPO mobilisation - unchanged from the previous year, the data showed.

Retail applications drop to 12.87 lakh in FY26 from 21.31 lakh in FY25

The data also showed that retail participation levels have dropped sharply. The average number of retail applications fell to 12.87 lakh in FY26 from 21.31 lakh in FY25, indicating that fewer individual investors are chasing new listings. While a handful of high-profile issues such as Bharat Coking Coal, LG Electronics and Meesho continued to draw strong traction, garnering tens of lakhs of applications, the broader trend suggests that the retail frenzy is cooling.

This has been attributed to sustained volatility in the equity market amid tariff concerns and geopolitical tensions, along with weak listing performance. Benchmark indices—the Sensex and Nifty 50—have declined nearly 15% so far this year, including a sharp fall of over 10% in March, amid the West Asia crisis and a spike in crude prices.

Adding to the pressure, listing-day average gains declined to just 8% from 30% in the previous year. Only 34 IPOs, or about 31%, managed to deliver returns of over 10%, compared to 71% in FY25, while just 37 are currently trading above their issue price, the data showed. The downturn comes after a prolonged period of strong returns, during which IPO investors saw gains of 202% in FY21, 78% in FY22, 49% in FY23, 16% in FY24, and 3% in FY25.

According to Haldea, lower investor enthusiasm can also be gauged from the decline in overall subscription levels. “Across categories, the average oversubscription stood at 28 times, compared to 49 times last year. Average retail oversubscription too stood at 18 times, compared to 35 times last year,” he added.

Meanwhile, overall public response, according to primedatabase.com, while still strong, was weaker than in FY25. As many as 60 out of 108 IPOs for which response data was available (or 56%) received a mega response of more than 10 times, down from 72% in the previous year. Of these 60 IPOs, 23 were subscribed over 50 times. Of the remaining 48 IPOs, 15 were oversubscribed more than three times, while 33 saw subscription between one and three times.

The largest IPO in FY26 was from Tata Capital (₹15,512 crore), followed by HDB Financial Services (₹12,500 crore) and LG Electronics (₹11,605 crore). At the other end, the smallest IPO was from Shree Ram Twistex, which raised ₹110 crore. The average deal size stood at ₹1,598 crore, 23% lower than ₹2,082 crore in the previous year.

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