IPO-bound companies get SEBI breather as West Asia conflict triggers market slowdown

“This has led several issuers to defer, recalibrate or withdraw issuance plans, leading to potential lapses in observation letter validity and duplication of regulatory processes,” it said.

The move follows representations from industry bodies citing uncertain market conditions due to the ongoing geopolitical tensions and subdued investor participation. It will require companies to get an undertaking from lead manager to the issue, confirming compliance with the Issue of Capital and Disclosure Requirements (ICDR) Regulations while submitting the updated offer document. ICDR regulations define the framework for companies issuing securities in India.

With the markets mired in volatility and sell-off, valuation has dipped to 52-week lows in several cases, directly affecting IPO plans. When markets are unstable, companies struggle to attract investors at favourable valuations, forcing many to delay their public issues until conditions improve. This will also hinder good IPO pricing.

MPS relief, IPO market disruption

Further, the regulator has also announced relaxations for MPS regulations that the companies fail to comply with.

SEBI said that recognised stock exchanges and depositories are advised not to take any penal action, as envisaged under the Master Circular, against entities for non-compliance of MPS norms during the said period. It added that any penal actions initiated by the exchanges or depositories against such listed entities for non-compliance with MPS requirements during the period from April 1, 2026 till date may be withdrawn.

SEBI still mandates 25% MPS, but now allows lower initial float and longer timelines (up to 10 years) for large companies to reach it.

The impact of IPO market disruption is broad-based. Companies across sectors — financial services, manufacturing, technology, consumer goods and infrastructure — had lined up IPOs worth around Rs 2.65 lakh crore earlier this year. Major offerings included NSE, SBI Mutual Fund and Jio Platforms. Now, many medium and large IPOs are on hold. Around Rs 1.40 lakh crore worth of IPOs are awaiting regulatory approval, while another Rs 1.25 lakh crore has already been cleared but is waiting for the right conditions.

Persistent delays could slow corporate fundraising and expansion plans, impact job creation and investment cycles. It would also lead to weaker performance in India’s primary market compared to last year’s record Rs 1.75 lakh crore fundraising. In short, unless markets stabilise soon, the IPO pipeline that looked robust at the start of 2026 may see significant disruptions.