Exit-heavy IPO pipeline runs into valuation resistance as deadlines near

A clutch of IPO-bound companies nearing regulatory timelines is running into valuation resistance, as a widening gap between seller expectations and investor appetite complicates listing plans in a softer market.

Across several of these upcoming issues, a common factor is the high share of offer-for-sale (OFS), indicating that many IPOs are as much about investor exits as fresh capital raising.

For instance, Continuum Green Energy Ltd’s proposed ₹3,650-crore IPO includes an OFS of ₹2,400 crore, nearly two-thirds of the issue, while Veritas Finance Ltd’s ₹2,800-crore offering has an OFS component of about ₹2,200 crore, or close to 80 per cent. Even Hero FinCorp Ltd’s planned issue includes an OFS of roughly ₹1,568 crore, accounting for over 40 per cent.

Market participants said such structures are becoming a friction point in the current environment, where investors are demanding more conservative valuations. “There is a bit of a mismatch. Investors want to come in lower, but existing shareholders are not willing to take that cut. That’s where deals are getting stuck,” said an investment banker.

Unlisted market

The shift is visible in the unlisted market, which often acts as a forward indicator for IPO pricing.

Shares of Hero FinCorp, among the companies that have secured approval from the Securities and Exchange Board of India, have corrected sharply in pre-IPO trades, falling to around ₹1,040–1,050 from levels of over ₹2,000 in the past year, according to platforms tracking unlisted shares.

Investor behaviour has become more cautious across both primary and unlisted markets, said Vijay Kuppa, CEO of InCred Money. “Investors are approaching the primary market with considerably more discernment in FY26 than they were 12 to 18 months ago.”

What we’re witnessing today is a recalibration of expectations, with investors demanding a more defensible entry point and focusing more on fundamentals, Kuppa said.

Wait or reprice?

Bankers said the current challenge is less about lack of demand and more about pricing, with investors building in a higher margin of safety amid lower listing gains and market volatility.

“The capital is available, but not at any price,” said another banker.

As a result, companies nearing IPO timelines are increasingly opting to wait rather than reprice issues. “If these deals were to launch today, many would have to revisit pricing. But most promoters would rather wait than reset valuations immediately,” the banker added.

Kamraj Singh Negi, MD and CEO–Investment Banking at Pantomath Capital, said the market is moving towards a “more calibrated approach”, with valuations increasingly linked to fundamentals such as earnings visibility and cash flows.

For now, however, with exit-heavy structures colliding with more cautious investor sentiment, IPO-bound firms face a narrowing set of options: cut valuations or hold back and wait for a more favourable market window.

Published on March 31, 2026