Are Banks Open Or Closed on Saturday, July 19?
19 Jul 2025
After a record-breaking 2024, where Indian companies raised a staggering ₹1.69 trillion through initial public offerings (IPOs), the market's enthusiasm has noticeably cooled in 2025. The mainboard, once a hotbed of activity, is now experiencing lukewarm interest, lower subscription levels, and significantly reduced listing gains.
However, a contrasting picture emerges in the SME IPO segment. While activity remains strong, analysts caution against misinterpreting this surge. They suggest it's fueled more by speculation and smaller issue sizes than by genuine investor conviction.
With several high-profile IPOs on the horizon, the question remains: Can India's primary market reignite its former fire?
India's IPO journey has been remarkable since 2019, showcasing a dramatic increase in fundraising—from ₹12,985 crore in 2019 to ₹1.19 trillion in 2021. 2024 reached new heights with ₹1.69 trillion raised, according to Prime Database. Yet, 2025 presents a stark contrast.
Pranav Haldea, managing director of Prime Database Group, notes, "While initial 2025 expectations were high, early challenges like tariffs and geopolitical tensions created secondary market volatility until March, dampening IPO activity. With markets recovering from April, IPOs have followed suit. Barring major negative events, the second half appears promising, with a strong pipeline."
The mainboard's cooling trend reflects broader sentiment shifts, driven by geopolitical uncertainties and tariff concerns. Kush Gupta, director at SKG Investment & Advisory, explains: "This isn't overvaluation, but rather an overheated segment taking a breather. The previous high subscription levels have given way to volatility, impacting investor confidence. Investors are opting for safer avenues like mutual funds, gold, and bonds."
Investor interest in 2025 is clearly divided. While SME IPOs experience oversubscription, the mainboard struggles to attract bids. Analysis shows only 19.2% of mainboard IPOs have seen overwhelming (80x) response, with 38.5% falling within the 1-10 times subscription range.
Haldea highlights the significance of SME IPO size: "Even high oversubscription in SME IPOs isn't truly representative. The notable factor is increased retail participation—around 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 limited institutional involvement."
Median listing gains have plummeted. Mainboard IPOs show a mere 8% gain, while SME IPOs have fallen even further to 4.6%—a significant drop from 2024's 17.3% and 39.3%, respectively.
Harshal Dasani, business head at Invasset PMS, states, "The drop reflects valuation correction and a sentiment shift. This correction is healthy and expected. The market's maturing; investors prioritize quality over hype. If issuers adapt, the IPO market can recover. Blind subscription frenzies are over; clarity will define the next cycle."
The continued SME frenzy raises concerns about speculation and governance. Dasani adds, "While some SMEs have strong financials, the speculative element is undeniable. SEBI has flagged risks of manipulation and poor post-listing governance. It resembles a gold rush—some gems exist, but many are pursued for the thrill."
Ranjit Jha, founder & CEO of Rurash Financials, echoes this sentiment: "The SME oversubscription reflects India's MSME growth but also hints at speculation, as investors chase quick gains over long-term fundamentals."
Despite the slowdown, the IPO pipeline remains robust. As of July, IPOs worth over ₹1 trillion have received SEBI approval, with another ₹1.4 trillion awaiting clearance.
Jha concludes, "With macro headwinds, tighter liquidity, and more discerning institutional participation, investors now seek sustainable growth rather than momentum bets. The current situation reflects weak investor sentiment due to global uncertainties and impending tariff deadlines. Q1 earnings are also under intense scrutiny due to high expectations."
