Record IPO Fundraising, Weak Post-Listing Performance
This record fundraising activity in the IPO market stands in sharp contrast to the performance of newly listed companies. While companies raised unprecedented amounts of money, investors experienced cooling demand, shown by lower listing premiums and negative returns for many recent IPOs.
Largest IPOs Mark Record Year Despite Slower Quarter
The year's largest IPOs included Tata Capital (₹15,512 crore), HDB Financial Services (₹12,500 crore), and LG Electronics India (₹11,605 crore). Despite a slower final quarter that raised only ₹18,772 crore, the annual total fundraising hit a record ₹1.79 lakh crore through 112 mainboard IPOs in the financial year ending March 2026. This represented a 10% rise from the ₹1.62 lakh crore raised the previous year, marking two consecutive years of all-time high fundraising. However, the average IPO size decreased by 23% to ₹1,598 crore, indicating a change in the typical scale of offerings.
Global IPO Leader, But Investor Returns Lag
India's IPO market was a global leader in deal volumes and value in FY26, outperforming markets like the US and Europe. Yet, this strong primary market performance is not translating into similar investor returns after listing. Historically, periods of heavy IPO fundraising have sometimes led to a market slowdown for two to three years, a pattern observers are watching. The current drop in listing gains is at a multi-year low, similar to what happened in FY18-19.
Global Tensions Fuel Investor Caution
Rising geopolitical tensions, including the conflict in West Asia and global uncertainties like US tariff measures, have dampened investor confidence, leading to a cautious market. This has caused significant swings in the secondary market, with major indices like the Nifty seeing drops, and mid- and small-cap stocks falling more sharply. This market unease has also been accompanied by large withdrawals by foreign institutional investors (FIIs), reducing available cash and investor interest in new listings.
Investor Returns Plummet as Many IPOs Trade Below Issue Price
Despite record fundraising, investor returns have weakened considerably. By March-end 2026, about 71 out of 108 mainboard IPOs were trading below their original issue price. The average return for IPOs in FY26 was negative, estimated at -7% by March-end, ending a trend of positive returns. Data from mid-February showed average listing gains dropped to 8.88%, the lowest in seven years, with only about 65% of IPOs trading above their issue price. This is a major change from previous years, when average listing gains were much higher, often over 20-30%.
Retail Investors Show Reduced Appetite
The drop in listing performance has clearly affected retail investor interest. The average number of retail applications fell to 12.87 lakh in FY26, down from 21.31 lakh the year before. The total value of retail bids also showed less aggressive bidding, suggesting individual investors are being more careful. Overall, average oversubscription levels have decreased, with retail oversubscription dropping to 18 times from 35 times in FY25.
High Valuations and IPO Oversupply Hit Returns
Concerns about high valuations are a key reason for limited listing gains. The large number of IPOs in recent years, combined with aggressive pricing and possibly overly optimistic forecasts, has created an oversupply of offerings competing for available capital, straining market liquidity. Stricter rules from SEBI on IPO pricing and disclosures might also be causing companies to reconsider their listing plans, leading to postponements or smaller issue sizes.
What's Next: Focus on Quality Over Quantity
Looking ahead, the pipeline for the upcoming fiscal year (FY27) remains strong. SEBI has approved 144 companies looking to raise about ₹1.75 lakh crore, with another 63 companies seeking approval. Experts expect capital raises to reach around $20 billion next fiscal year. The focus, however, is shifting from just the number of IPOs to 'quality, scale, and pricing discipline.' Future IPO success will depend on companies showing strong management, clear profit potential, and leadership in growing sectors. High-quality companies are expected to attract investor interest in a more selective market.