After a highly active 2024, the Indian IPO market has seen a slowdown in new listings due to a correction in the secondary market. Over the past three weeks, there have been no main-board IPOs, reflecting weakened investor sentiment.
In January and February 2025, only nine companies went public, a sharp drop compared to 16 IPOs in December 2024. The slowdown has also forced three companies—Advanced Sys-tek, SFC Environmental Technologies, and Viney Corporation—to withdraw their IPO plans.
Why Has the IPO Market Slowed Down?
According to Bhavesh Shah, MD and Head of Investment Banking at Equirus, the primary reason for the slowdown is the correction in the secondary market, particularly in January and February.
- Investor Shift: With declining stock prices, investors are focusing on existing portfolios rather than exploring new IPOs.
- Reduced Risk Appetite: The uncertainty in market conditions has led to a cautious approach among investors.
- Recalibration of IPO Valuations: Companies may need to adjust their IPO pricing to match the current market scenario.
Despite these challenges, experts believe the slowdown is temporary, with a strong IPO pipeline waiting for market conditions to stabilize.
Current Status of IPO Filings
While IPO listings have declined, companies continue to file IPO documents with SEBI, signaling that interest remains high.
According to V. Prashant Rao, Director and Head of ECM Investment Banking at Anand Rathi Advisors:
- 45 companies with SEBI approval are set to raise ₹67,000 crore.
- 69 companies awaiting SEBI approval aim to raise ₹1.15 lakh crore.
- 45 of these 69 companies filed their Draft Red Herring Prospectus (DRHPs) in the last two months.
- Knowledge Realty Trust (sponsored by Sattva Group and Blackstone) has also filed for a ₹6,200 crore REIT public issue.
This wave of filings suggests that while listings have slowed down, the IPO market is far from stagnant.
Outlook: When Will the IPO Market Revive?
Expert Predictions
- Bhavesh Shah (Equirus) expects a market revival in the next few months as market conditions stabilize.
- Rao (Anand Rathi Advisors) suggests that companies may adjust IPO valuations to attract investors.
Key Factors That Could Revive IPO Activity
- Market Stabilization: As stock prices recover, investors may regain confidence in new IPOs.
- Strong Mutual Fund Inflows: Despite volatility, domestic fund flows remain resilient, supporting new investments.
- Attractive IPO Pricing: Companies may lower valuations to make their IPOs more appealing to investors.
While the Indian IPO market has slowed down, it is not in decline. Companies are still filing IPO documents, and experts believe that the market will rebound soon. The key to attracting investors will be realistic pricing and strong fundamentals, ensuring that IPOs remain an attractive investment option despite market fluctuations.
