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India’s IPO Slowdown in 2025: Market Turbulence or Just a Temporary Pause?
- 4m 0•
- 27 Mar 2025
If you’ve been riding the IPO wave over the past few years, you’ve either struck gold with a multi-bagger or regretted missing out on one that skyrocketed post-listing. From 2020 to 2024, India’s IPO market was a gold rush—record-high listings, surging investor sentiment, and companies scrambling to go public. Retail and institutional investors eagerly jumped in, chasing listing-day windfalls.
But as 2025 unfolds, the frenzy has hit an unexpected pause. DRHP filings plunged 48% in February, and the last major IPO—Quality Power —debuted on February 14. Since then? Silence. No big listings. No bidding wars. Just an eerie calm. So, what’s causing this sudden slowdown? Is it a sign of deeper economic troubles or a breather before the next IPO boom? And more importantly, how should traders and long-term investors navigate this shift? Let’s dive into the numbers, the reasons behind the slump, and whether it’s time to sit tight or spot hidden gems in the market.
The IPO Frenzy: 2020–2024
The past four years were a golden period for IPOs in India. The post-pandemic economic recovery fueled the Indian economy and strengthened investor appetite. A surge in tech startups, fintech unicorns, and digital-first businesses further accelerated this growth. In 2024 alone, public market exits via IPOs reached $17 billion across 153 deals , a 21% increase from the previous year. High-profile listings such as Swiggy, Mankind Pharma and Tata Technologies commanded massive oversubscriptions, reflecting strong demand.
Private equity (PE) and venture capital (VC) firms also took advantage of this momentum, using the IPO route to exit their investments at lucrative valuations. Strategic sales, on the other hand, took a backseat as public market valuations were far more attractive.
The Shift in 2025: A Market in Hibernation
The IPO momentum that surged over the past few years has suddenly hit a wall. The numbers tell a stark story:
-
Only 14 companies filed for IPOs in February 2025, down from 29 in January—the lowest in over a year.
-
Major IPOs have been postponed, including Tata Capital’s $11 billion listing.
-
Most of the 44 companies with SEBI approval have pushed their IPO plans to the next quarter.
-
Investor enthusiasm is fading, with two-thirds of early 2025 IPOs now trading below their issue price.
Key Reasons Behind the IPO Slump
The sharp decline in IPO activity isn’t random—several factors are driving this slowdown.
- Market Volatility and Weak Investor Sentiment
The 2025 market correction has slammed valuations, making companies wary of going public at lower prices. Once chasing quick IPO gains, retail investors are now on the sidelines after a string of weak listings. The Nifty Midcap 150 and Nifty Smallcap 250 have plunged 18% and 22%, respectively, underscoring broader market jitters. Meanwhile, Foreign Institutional Investors (FIIs) are pulling out capital, adding to the volatility.
- Global and Domestic Economic Uncertainty
Global economic uncertainty is another major force behind the IPO slowdown. The US has escalated tariffs on imports from China, Mexico, and Canada, igniting a trade war fuelling market volatility, inflation, and fears of slower growth. The ripple effect hit Indian markets hard, with the Sensex and Nifty slipping amid concerns of an economic downturn. Domestically, rising inflation and high interest rates have squeezed liquidity, making investors more risk-averse.
- Stringent Regulatory Environment
SEBI’s tighter regulations on IPO pricing and disclosures have added to the slowdown. Stricter valuation norms and transparency requirements are making companies rethink their listing plans. As a result, several firms with SEBI approval have either delayed their IPOs or opted to reduce issue sizes.
- Liquidity Crunch and Institutional Caution
A liquidity crunch in the capital markets has made institutional investors cautious. FIIs have pulled out ₹2.81 lakh crore since October 2024, drying up funds for new IPOs. With volatility high, many fund managers are prioritising portfolio stability over fresh investments.
Impact on Traders and Long-term Investors
For traders, the IPO slump means fewer chances to cash in on listing-day rallies. With new listings drying up, quick profits are harder to find. Even the once-reliable grey market premium (GMP) has weakened, reflecting dampened market sentiment.
For long-term investors, fewer IPOs mean limited access to high-growth newcomers. However, the slowdown opens doors to accumulate blue-chip stocks at attractive valuations. With established companies trading at more reasonable prices, they offer a safer, more stable alternative for long-term wealth creation.
Will the IPO Market Rebound?
Despite the slowdown, experts predict a rebound in the IPO market by the second half of 2025. Fintech, renewable energy, and AI-driven companies are expected to draw strong investor interest. Major IPOs from Tata Capital, HDB Financials, and Lenskart remain in the pipeline, potentially reigniting market enthusiasm. A revival in institutional investments and supportive government initiatives could further pave the way for a resurgence in public listings.
That said, the road ahead will likely be more measured and selective. Investors are becoming more discerning; only companies with strong fundamentals and sustainable growth prospects will successfully tap into public markets.
Conclusion
The slowdown in the IPO market in India results from multiple macroeconomic and regulatory factors, including market volatility, global trade tensions, regulator SEBI’s stricter norms and an institutional liquidity crunch. While this has temporarily paused the IPO activity, history suggests that such downturns are cyclical. Instead of chasing every new listing, focus on fundamentally strong companies—whether in the IPO or secondary markets. For investors, this is a time for patience. As economic conditions stabilise, the IPO wave may return, offering fresh opportunities for those who are prepared. Is this just a power nap before the IPO market wakes up again? Or a long hibernation? Only time will tell.
References:
https://tejimandi.com/blogs/feature-articles/why-are-fiis-withdrawing-money-from-the-indian-market
This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their research and consult with financial professionals before making any investment decisions. Read the full disclaimer here
Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI-prescribed Combined Risk Disclosure Document before investing. Brokerage will not exceed SEBI’s prescribed limit
If you’ve been riding the IPO wave over the past few years, you’ve either struck gold with a multi-bagger or regretted missing out on one that skyrocketed post-listing. From 2020 to 2024, India’s IPO market was a gold rush—record-high listings, surging investor sentiment, and companies scrambling to go public. Retail and institutional investors eagerly jumped in, chasing listing-day windfalls.
But as 2025 unfolds, the frenzy has hit an unexpected pause. DRHP filings plunged 48% in February, and the last major IPO—Quality Power —debuted on February 14. Since then? Silence. No big listings. No bidding wars. Just an eerie calm. So, what’s causing this sudden slowdown? Is it a sign of deeper economic troubles or a breather before the next IPO boom? And more importantly, how should traders and long-term investors navigate this shift? Let’s dive into the numbers, the reasons behind the slump, and whether it’s time to sit tight or spot hidden gems in the market.
The IPO Frenzy: 2020–2024
The past four years were a golden period for IPOs in India. The post-pandemic economic recovery fueled the Indian economy and strengthened investor appetite. A surge in tech startups, fintech unicorns, and digital-first businesses further accelerated this growth. In 2024 alone, public market exits via IPOs reached $17 billion across 153 deals , a 21% increase from the previous year. High-profile listings such as Swiggy, Mankind Pharma and Tata Technologies commanded massive oversubscriptions, reflecting strong demand.
Private equity (PE) and venture capital (VC) firms also took advantage of this momentum, using the IPO route to exit their investments at lucrative valuations. Strategic sales, on the other hand, took a backseat as public market valuations were far more attractive.
The Shift in 2025: A Market in Hibernation
The IPO momentum that surged over the past few years has suddenly hit a wall. The numbers tell a stark story:
-
Only 14 companies filed for IPOs in February 2025, down from 29 in January—the lowest in over a year.
-
Major IPOs have been postponed, including Tata Capital’s $11 billion listing.
-
Most of the 44 companies with SEBI approval have pushed their IPO plans to the next quarter.
-
Investor enthusiasm is fading, with two-thirds of early 2025 IPOs now trading below their issue price.
Key Reasons Behind the IPO Slump
The sharp decline in IPO activity isn’t random—several factors are driving this slowdown.
- Market Volatility and Weak Investor Sentiment
The 2025 market correction has slammed valuations, making companies wary of going public at lower prices. Once chasing quick IPO gains, retail investors are now on the sidelines after a string of weak listings. The Nifty Midcap 150 and Nifty Smallcap 250 have plunged 18% and 22%, respectively, underscoring broader market jitters. Meanwhile, Foreign Institutional Investors (FIIs) are pulling out capital, adding to the volatility.
- Global and Domestic Economic Uncertainty
Global economic uncertainty is another major force behind the IPO slowdown. The US has escalated tariffs on imports from China, Mexico, and Canada, igniting a trade war fuelling market volatility, inflation, and fears of slower growth. The ripple effect hit Indian markets hard, with the Sensex and Nifty slipping amid concerns of an economic downturn. Domestically, rising inflation and high interest rates have squeezed liquidity, making investors more risk-averse.
- Stringent Regulatory Environment
SEBI’s tighter regulations on IPO pricing and disclosures have added to the slowdown. Stricter valuation norms and transparency requirements are making companies rethink their listing plans. As a result, several firms with SEBI approval have either delayed their IPOs or opted to reduce issue sizes.
- Liquidity Crunch and Institutional Caution
A liquidity crunch in the capital markets has made institutional investors cautious. FIIs have pulled out ₹2.81 lakh crore since October 2024, drying up funds for new IPOs. With volatility high, many fund managers are prioritising portfolio stability over fresh investments.
Impact on Traders and Long-term Investors
For traders, the IPO slump means fewer chances to cash in on listing-day rallies. With new listings drying up, quick profits are harder to find. Even the once-reliable grey market premium (GMP) has weakened, reflecting dampened market sentiment.
For long-term investors, fewer IPOs mean limited access to high-growth newcomers. However, the slowdown opens doors to accumulate blue-chip stocks at attractive valuations. With established companies trading at more reasonable prices, they offer a safer, more stable alternative for long-term wealth creation.
Will the IPO Market Rebound?
Despite the slowdown, experts predict a rebound in the IPO market by the second half of 2025. Fintech, renewable energy, and AI-driven companies are expected to draw strong investor interest. Major IPOs from Tata Capital, HDB Financials, and Lenskart remain in the pipeline, potentially reigniting market enthusiasm. A revival in institutional investments and supportive government initiatives could further pave the way for a resurgence in public listings.
That said, the road ahead will likely be more measured and selective. Investors are becoming more discerning; only companies with strong fundamentals and sustainable growth prospects will successfully tap into public markets.
Conclusion
The slowdown in the IPO market in India results from multiple macroeconomic and regulatory factors, including market volatility, global trade tensions, regulator SEBI’s stricter norms and an institutional liquidity crunch. While this has temporarily paused the IPO activity, history suggests that such downturns are cyclical. Instead of chasing every new listing, focus on fundamentally strong companies—whether in the IPO or secondary markets. For investors, this is a time for patience. As economic conditions stabilise, the IPO wave may return, offering fresh opportunities for those who are prepared. Is this just a power nap before the IPO market wakes up again? Or a long hibernation? Only time will tell.
References:
https://tejimandi.com/blogs/feature-articles/why-are-fiis-withdrawing-money-from-the-indian-market
This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their research and consult with financial professionals before making any investment decisions. Read the full disclaimer here
Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI-prescribed Combined Risk Disclosure Document before investing. Brokerage will not exceed SEBI’s prescribed limit