India’s financial markets, a notable shift has occurred in the realm of initial public offerings (IPOs). After a period of heightened activity throughout 2024, the past three weeks have seen a conspicuous absence of new listings on the main bourses. This slowdown is intricately linked to a correction in the secondary market, prompting both companies and investors to reassess their positions.
The contrast between the bustling IPO scene of 2024 and the current lull is striking. Last year, an impressive 91 maiden public issues collectively amassed ₹1.6 lakh crore. This surge was fueled by robust retail participation, a resilient economy, and a boom in private capital expenditure. Companies across various sectors capitalized on favorable market conditions to go public, offering investors a plethora of opportunities.
However, the onset of 2025 has painted a different picture. January witnessed five companies making their public debut, followed by four in February. This is a significant decline compared to the 16 listings recorded in December 2024. The most recent IPO was that of Quality Power Electrical Equipment Ltd, which opened for a three-day bidding process on February 14. Since then, the primary market has remained dormant, reflecting a broader trend of caution and recalibration.
This slowdown is not merely a matter of reduced listings; it also encompasses companies reevaluating their IPO plans. Notably, at least three firms—Advanced Sys-tek, SFC Environmental Technologies, and Viney Corporation—have withdrawn their draft papers in recent months. This decision underscores a growing hesitancy amid the current market volatility.
Industry experts attribute this deceleration primarily to corrections in the secondary market observed in January and February. Bhavesh Shah, Managing Director and Head of Investment Banking at Equirus, noted that this correction adversely affected the share prices of several listed companies. Consequently, investors have shifted their focus towards managing existing portfolios rather than venturing into new listings. This shift in investor sentiment has played a pivotal role in the recent IPO slowdown.
The current market dynamics have also opened avenues for private equity (PE) and venture capital (VC) sectors. With the IPO market experiencing a downturn, industry leaders anticipate an uptick in PE and VC deals. Sectors such as financial services, information technology, and healthcare are expected to attract significant investment. An EY-IVCA report highlighted that PE and VC investments reached $56 billion in 2024, a decrease from the record $76.7 billion in 2021. Despite this decline, the present market conditions are viewed as a buyer’s market, with increased investment activity anticipated in the coming months.
The broader context of India’s IPO landscape reveals a remarkable shift in the Asian financial hierarchy. In 2024, India surpassed China to become Asia’s leading market for IPOs, driven by high stock prices and prominent listings such as Swiggy and Hyundai Motor. This milestone positioned India as the world’s second-largest equity fundraising market after the United States. The National Stock Exchange of India was poised to surpass Nasdaq and the Hong Kong Stock Exchange in primary listings by value, marking a significant transformation in the region’s financial dynamics.
However, the current slowdown serves as a reminder of the market’s inherent volatility. Factors such as economic fluctuations, investor sentiment, and global financial trends continually influence the IPO landscape. While the recent deceleration may prompt concerns, it also offers an opportunity for stakeholders to reassess strategies, ensuring that future public offerings are both timely and resilient.
In conclusion, the recent hiatus in India’s IPO activity reflects a complex interplay of market corrections, investor behavior, and broader economic shifts. As companies and investors navigate this evolving landscape, a cautious yet optimistic approach may pave the way for a revitalized and robust IPO market in the near future.
India’s IPO Market Experiences Notable Slowdown
