Introduction : Every week, a new company is ringing the bell at Dalal Street, marking another milestone in India’s IPO rush. From fintech startups to industrial giants, the pipeline is overflowing over ₹70,000 crore worth of public issues are lined up in the coming months. This surge has reignited memories of the 2021 IPO frenzy, when optimism and liquidity fuelled record-breaking listings. Yet, beneath the excitement, a critical question emerges: are we witnessing a sustainable cycle of capital formation, or a replay of overvaluation risk? The primary market is buzzing, even as the secondary market remains largely placid an unusual divergence in investor sentiment. Retail participation is at an all-time high, driven by easy digital access, strong mutual fund inflows, and rising financial awareness. At the same time, many IPOs are being used as exit routes for early investors and promoters, raising concerns about long-term value creation. Institutional investors, too, are treading cautiously, balancing opportunity with the fear of stretched valuations. The IPO boom reflects India’s growth story and investor confidence, but it also tests the market’s ability to separate substance from speculation. As the euphoria builds, the challenge for investors is clear, is it possible to find real opportunity amid the noise of overvaluation?
An Initial Public Offering (IPO) is the process through which an unlisted public company offers its shares to the public for the first time and becomes listed on a stock exchange. It marks a company’s transition from private ownership typically held by founders, early investors, and venture capitalists to public ownership, where anyone can buy and sell its shares in the open market. Through an IPO, a company raises capital that can be used for business expansion, debt repayment, or other corporate purposes. In return, investors get an opportunity to become shareholders and participate in the company’s growth. IPOs are usually managed by investment bankers and regulated by SEBI in India, ensuring transparency and investor protection. In essence, an IPO serves as both a fundraising mechanism for companies and a wealth-creation opportunity for investors though the success of an IPO depends on timing, valuation, and market sentiment.
Main Board IPO vs SME IPO: Understanding the Difference A Main Board IPO refers to a public issue of shares by a company that is listed on the main platform of a stock exchange, such as the NSE (National Stock Exchange) or BSE (Bombay Stock Exchange). These IPOs are usually floated by large or well-established companies that meet specific eligibility criteria set by SEBI and the exchanges.
To qualify for a main board listing, a company must have: A minimum post-issue paid-up capital of ₹10 crore or more. A track record of profitability, net worth, and tangible assets as defined by SEBI. A minimum number of shareholders after listing and a prescribed issue size (usually ₹25 crore or above). Main board IPOs are open to all categories of investors Qualified Institutional Buyers (QIBs), Non-Institutional Investors (NIIs), and Retail Investors and are governed by strict disclosure, compliance, and reporting norms. While both Main Board and SME IPOs allow companies to raise funds from the public, they cater to different segments of businesses and operate under distinct listing requirements.
An SME IPO (Small and Medium Enterprise IPO) is designed for smaller and emerging companies that wish to access public markets but may not yet meet the criteria for main board listing. These IPOs are listed on the SME platforms of the exchanges BSE SME or NSE Emerge. The issue size is smaller (as low as ₹1 crore), and compliance norms are more relaxed to encourage entrepreneurship. To qualify for an SME (Small and Medium Enterprise) IPO and get listed on BSE SME or NSE Emerge, a company must meet specific eligibility requirements set by SEBI and the respective exchanges. Post-Issue Paid-Up Capital The company’s post-issue paid-up capital must be less than ₹25 crore. If it exceeds ₹25 crore after the IPO, it must list on the main board instead of the SME platform. Sponsored Net Tangible Assets Minimum ₹1.5 crore as per the latest audited financial statements. Net Worth Minimum ₹1 crore for the preceding three years. Track Record / Operational History The company must have a track record of at least 3 years (either as the current entity or through promoters/group companies). In case of a shorter track record, it can still qualify if it has been funded by a bank, financial institution, or SEBI-registered venture capital fund. Positive Cash Flow Should have positive cash flow from operations in at least two of the last three years. Distributable Profits Must have earned profits in at least two of the immediately preceding three years. Number of Shareholders Minimum 50 allottees are required at the time of IPO allotment.
Other Conditions Company must have a website with updated financial and corporate information. Promoters should not be wilful defaulters or barred by SEBI. The issue must be through a merchant banker registered with SEBI. What’s Driving the IPO Boom? India’s IPO boom is being powered by a mix of strong liquidity, rising investor participation, and renewed corporate confidence.
Despite global uncertainties, the domestic market has remained remarkably resilient, attracting both institutional and retail investors. One of the key drivers is the surge in domestic liquidity, fuelled by steady mutual fund inflows, SIP investments, and pension fund participation. Retail investors, empowered by technology and simplified digital platforms like UPI-based IPO applications, are entering the markets in record numbers. The combination of rising disposable incomes and financial literacy has turned first-time investors into active market participants.
Corporates, on the other hand, see this as an ideal window to raise capital while valuations are attractive and market sentiment is buoyant. Many startups and established firms are using IPOs to deleverage debt, fund expansion, or give exits to early investors. Another factor driving this wave is the government’s policy reforms and SEBI’s streamlined IPO framework, which have reduced timelines and improved transparency in the listing process.
The ease of doing business and strong GDP growth have also created a favourable environment for new listings. Global investors view India as a long-term growth story, especially with its demographic dividend and digital transformation. The relative underperformance of other emerging markets has channelled more global capital towards India’s equities.
Furthermore, corporate governance standards and disclosure norms have improved, increasing investor trust in listed companies. Analysts also credit the robust pipeline to record corporate profits and a desire to tap the markets before interest rates rise further. Many companies that delayed their IPOs post-pandemic are now executing them in a more stable market environment. In essence, the IPO boom reflects the confidence of India Inc., the enthusiasm of retail investors, and the optimism of global funds all converging to make Indian primary markets one of the most active in the world today Interesting facts about Indian IPOs in 2025.
India’s IPO market is set for a record quarter: companies are expected to raise up to ~$8 billion in new issues during Q4 2025. In the first half of 2025 alone, 119 IPOs came to market, raising roughly ₹511.50 billion (about ₹51,150 crore). Unlike earlier years, the share of primary issuances (fresh capital) has increased in 2025, as many companies aim to raise money for growth rather than only promoter exits. The Health / Life Sciences sector has seen notable IPO momentum in Q1 2025 alone, it recorded one of its strongest first quarters for new listings in two decades. Large IPOs are dominating 2025: for example, Tata Capital’s IPO became one of the biggest in the year and was fully subscribed.
The LG Electronics India IPO also drew heavyweight institutional interest, with domestic and global anchor investors participating. Some IPOs continue to be structured as Offers for Sale (OFS), meaning existing shareholders are selling stakes rather than raising new capital. This signals promoter interest in monetization. Retail investor interest is extremely strong: certain IPOs, especially in the SME space, have become multibaggers quickly post-listing. For example, SME IPOs in 2025 have raised over ₹6,800 crore, and 14 companies from this segment turned multi-baggers. On the large-cap side, Urban Company’s IPO was subscribed over 100 times, making it one of the most aggressively bid issues of 2025. The Opportunity Side
The ongoing IPO boom in India presents a unique window of opportunity for both companies and investors. For corporates, it offers an efficient route to raise capital for expansion, debt reduction, and digital transformation. A successful listing not only strengthens a company’s balance sheet but also enhances its visibility, credibility, and governance standards. For investors, IPOs open doors to participate in early-stage growth stories of promising businesses that were once privately held. Many IPOs in sectors like fintech, renewable energy, and healthcare represent India’s evolving economic landscape, giving retail investors access to new-age industries. Strong domestic liquidity and rising disposable incomes have made Indian households more willing to allocate funds toward equity investments.
The government’s reforms and SEBI’s streamlined regulations have further improved transparency and investor confidence in the primary market. Institutional participation from mutual funds, pension funds, and foreign investors reinforces the long-term potential of Indian equities. Historical data also shows that well-chosen IPOs often generate strong long-term wealth, provided investors focus on fundamentals rather than short-term listing gains. Overall, the opportunity side of the IPO boom reflects India’s economic maturity where growth capital meets investor aspiration in a market full of possibilities.
The IPO boom has opened up a fresh wave of investment opportunities for retail investors, who are now more empowered and financially aware than ever before. With simplified digital platforms like UPI-based IPO applications and online demat onboarding, retail participation in primary markets has reached record highs. Investors can now access promising businesses in sectors like renewable energy, pharmaceuticals, technology, FMCG, and logistics, many of which were once limited to private equity players. IPOs provide retail investors with the chance to enter growth-oriented companies at the ground level often before they achieve full market valuation.
Beyond IPOs, retail investors also have diversified opportunities across mutual funds, exchange-traded funds (ETFs), sovereign gold bonds, and NPS, allowing them to build balanced portfolios. The growing SME IPO segment has further expanded access, enabling small investors to tap into the entrepreneurial side of India’s economy. With SEBI tightening disclosure and governance norms, investor protection has improved, enhancing trust in new listings.
The key, however, lies in informed decision-making analysing fundamentals, valuation, and long-term potential instead of chasing short-term hype. As India’s financial ecosystem deepens, retail investors stand to become major wealth creators by aligning their investments with disciplined financial planning. In short, the Indian market today offers retail investors not just participation, but genuine ownership in the nation’s growth story. Why Retail Investors often don’t get IPO allotments. Retail investors frequently face disappointment in IPO allotments because of the massive oversubscription levels seen in popular issues. In India, only 35% of an IPO’s total shares are reserved for the retail investor category (applications up to ₹2 lakh), and when lakhs of investors apply for a limited number of shares, the probability of allotment drops sharply. SEBI mandates that allotments must be made through a lottery system when retail demand exceeds supply, ensuring fairness but not guaranteed success for every applicant.
For example, in highly sought-after IPOs that are oversubscribed 50 to 100 times, only a small fraction of applicants receive a single lot, while the rest receive none. Many retail investors also make mistakes such as applying for multiple lots under the same PAN or using improper ASBA details, leading to rejections. Furthermore, high retail enthusiasm driven by expectations of “listing gains” often causes speculative applications rather than informed investing. Another factor is that Qualified Institutional Buyers (QIBs) and Non-Institutional Investors (NIIs) typically subscribe first, influencing pricing and sentiment, which later floods the retail category with last-minute applications.
Some IPOs with smaller issue sizes or SME listings have fewer shares reserved for retail investors, further reducing the odds. Although SEBI has introduced uniform allotment rules to make the process more equitable, sheer demand in blockbuster IPOs continues to make allotment a matter of luck for many. In essence, the growing popularity of IPOs among retail investors is both a positive sign of financial inclusion and a practical reminder that scarcity and high demand make allotment highly competitive in India’s booming primary market. The Risk / Overvaluation Angle in IPO 2025.
While the IPO boom of 2025 has created excitement across markets, it also carries signs of overvaluation and speculative enthusiasm that warrant caution. Many companies are launching IPOs at aggressive pricing, banking on strong investor sentiment rather than sustainable fundamentals. Analysts have pointed out that valuations in some sectors =especially fintech, consumer tech, and renewable energy appear disconnected from earnings growth or profitability metrics. A large share of new issues are structured as Offers for Sale (OFS), promoters and early investors are simply cashing out rather than raising fresh capital for expansion, raising questions about long-term value creation. Several IPOs have debuted with impressive listing-day gains, only to correct sharply within weeks as post-listing reality set in. The secondary market’s subdued performance in 2025 adds another layer of risk while the primary market is euphoric, the broader indices are moving flat, indicating a potential divergence between price and performance. The liquidity-driven rally has also encouraged herd behaviour among retail investors, many of whom apply for IPOs without analysing fundamentals, hoping only for listing gains. This behaviour mirrors the 2021 IPO frenzy, when companies like Paytm and Zomato saw massive initial interest but later struggled to justify their valuations. Moreover, interest rate uncertainty and global geopolitical tensions can easily trigger volatility, affecting investor appetite for high-priced offerings. With mutual funds and institutional investors becoming more selective, many recent IPOs risk undersubscription or muted post-listing performance if sentiment cools. Analysts caution that while India’s growth story remains intact, valuation discipline must not be compromised in the rush to go public. SEBI’s tighter disclosure norms and enhanced scrutiny are steps in the right direction, but market euphoria can often outpace regulation.
Another red flag is the concentration of IPO activity in a few hot sectors, leaving investors exposed to cyclical corrections. The sustainability of this boom will depend on how many of these companies can actually deliver profits and justify their lofty valuations over the next few quarters. In essence, the IPO boom of 2025 presents both opportunity and risk a fine line separating financial optimism from speculative excess. Aggressive Pricing & Overvaluation. Many IPOs in 2025 are priced at “aggressive multiples” driven more by hype than strong fundamentals, leading to sharp corrections post-listing. Some IPOs listing gains have been fleeting, with prices falling within hours of listing, revealing a mismatch between issue pricing and investor willingness to hold. Offer for Sale (OFS) Dominance. The IPO of WeWork India was structured entirely as an OFS meaning no fresh capital raised; existing shareholders sold their stakes. This underscores that some IPOs are more about promoter exit rather than business expansion, raising questions about future growth and value. Investor & Market Warnings / Skepticism. Governance advisory firm InGovern flagged WeWork India’s disclosures just days before listing, citing weak financials, high costs, and promoter share pledges red flags for valuation and governance risks. Media coverage describes “valuation fatigue” among merchant bankers, global volatility, and concerns over unpredictable regulations as dampeners to the exuberance. Regulatory Signals / Warnings SEBI’s officials have urged merchant bankers to adopt “realistic valuations” for large IPOs, warning that excessive valuations could erode retail investor trust and lead to post-listing corrections.
Conclusion As the dust settles on India’s bustling IPO season, Dalal Street once again echoes with stories of triumph and caution. For some investors, it has been a season of golden opportunities quick gains, new listings, and the thrill of discovery. For others, it’s been a reminder that not every shiny debut turns into a lasting success story. Like every wave in the market’s long tide, this IPO boom too will separate the speculative from the steadfast. In the end, the winners will be those who invest with patience, research, and discipline not those chasing noise or hype. The Indian IPO journey of 2025 will be remembered not just for its record numbers, but for teaching investors that real wealth is built on understanding, not excitement.
- Neeraj Vasudevan
No comments:
Post a Comment