Meanwhile, the SME IPO segment is showing some buoyancy. Activity remains strong, but analysts warn that the surge may be misleading, driven more by speculative enthusiasm and small issue sizes than by fundamental investor conviction.
As several high-profile IPOs prepare to debut in the coming months, all eyes are on whether India’s primary market can rekindle its fire in 2025.
From frenzy to filtered interest
India’s IPO story has seen a sharp rise since 2019, with a dramatic increase in fundraising—from ₹12,985 crore in 2019 to ₹1.19 trillion in 2021. After two relatively slower years, 2024 set a new benchmark with ₹1.69 trillion raised, according to Prime Database.
But 2025 has brought a reality check.
“It’s hard to put a number to where the year will end,” said Pranav Haldea, managing director, Prime Database Group. “At the start of 2025, expectations were high for all-time record IPO activity. But early challenges—like tariffs and geopolitical tensions—led to volatility in the secondary market until March, keeping IPO activity muted. With markets picking up from April, IPOs have followed suit. Unless there is a major negative event, the second half looks promising, with a strong pipeline ready to launch.”
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The cooling trend in the mainboard space reflects broader shifts in sentiment, triggered by geopolitical tensions and tariff uncertainties.
“In my opinion, this is not a reflection of overvaluation but more of an overheated/outperforming segment taking a breather,” said Kush Gupta, director at SKG Investment & Advisory. “During much of 2024, IPO subscriptions were through the roof, but in the last 6-8 months we have seen a lot of volatility.”
He added: “Nifty has fallen approximately 10% and also then recovered during this period. This has led to a shift in investor sentiment. Investors are now choosing safer options like mutual funds, gold, and bonds. IPOs, where listing gains can be a coin toss, are attracting less interest than last year.”
A tale of two markets
Investor interest in 2025 has clearly split across segments. While SME IPOs are seeing some oversubscription, the mainboard is struggling to attract bids. AMint analysis reveals that only 19.2% of mainboard IPOs have seen an overwhelming response of 80-times, while 38.5% remain in the 1–10 times subscription range.
But Haldea points out, “SME IPOs are small in size, so even high oversubscription isn’t very meaningful. What stands out is the surge in retail participation—about one lakh applications per IPO—driven by last year’s strong listing gains. Unlike the mainboard, the SME market is dominated by individual investors, with little institutional presence.”
Listing gains lose steam
One of the biggest shifts this year is the steep fall in listing day gains. Median listing gains for mainboard IPOs have dropped to just 8%, while SME IPOs have seen a sharper decline to 4.6%—a far cry from 2024’s 17.3% and 39.3%, respectively.
“The sharp drop in median listing gains to just 8% in 2025 reflects both a valuation correction and a broader sentiment shift,” said Harshal Dasani, business head at Invasset PMS. “The correction is healthy and expected.”
He added, “The market is maturing. Investors aren’t chasing hype; they’re rewarding quality. If issuers adapt to this more rational environment, the IPO engine can regain strength. Gone are the days of blind subscription frenzy—clarity, not chaos, will define the next cycle.”
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The continued frenzy in the SME space is raising concerns about speculative behaviour and governance risks.
“Some SMEs do have solid financials and scalable models. However, the speculative undercurrent is hard to ignore,” said Dasani. “Sebi has raised red flags, citing risk of manipulation and poor post-listing governance. The frenzy resembles a gold rush—where some gems exist, but many are chased for the thrill.”
“The SME segment’s oversubscription boom reflects India’s thriving MSME growth but also hints at speculation, as many investors chase quick gains over long-term fundamentals,” said Ranjit Jha, founder & CEO, Rurash Financials.
Gupta also warned against excessive hype. “While there is a hint of speculation in the SME segment driving this phenomenon, one also has to understand what the IPO market has become lately.”
A strong pipeline ahead
Despite the slowdown, the IPO pipeline remains robust. As of July, IPOs worth over ₹1 trillion have received Sebi approval, while another ₹1.4 trillion is awaiting clearance.
“This year, with macro headwinds, tighter liquidity, and more discerning institutional participation, investors are expecting sustainable growth stories rather than just momentum bets,” said Jha. “However, the current situation is more of weak investor sentiment due to global uncertainties and the impending tariff deadlines. Q1 earnings are also in focus due to high expectations.”
