Sebi's IPO size relaxation has few takers as valuations take priority

The reason is that the current IPO market is only interested in valuations. Companies would prefer not to proceed with IPOs than raise less money at a price that does not align with their calculations.

"We have not seen issuers exploring this option as of now," said Sourav Modi, partner at law firm JSA.

"Indian markets have an appetite for deals which match their pricing expectations. We have seen big-ticket InvITs (Infrastructure Investment Trusts), Reits (Real Estate Investment Trusts) and IPOs being massively oversubscribed in the last four weeks, and none of them reduced their size by more than 20%," he explained.

For instance, three consecutive mainboard IPOs of Bagmane Prime Office REIT, OnEMI Technology Solutions, and Citius Transnet Investment Trust, were subscribed 25, 10, and 20 times, respectively, without the need to reduce their offer size.

Pricing is vital

"The 50% flexibility acts as a buffer, but executing a reduction of that scale can affect investor confidence regarding demand," a dealmaker at a Mumbai-based investment bank explained, wishing to remain unnamed since they are not authorized to speak to the media.

"For our large mandates, we are currently focusing on matching institutional pricing demands rather than resizing capital requirements. If pricing aligns with market expectations, then the current liquidity pipeline will remain sufficient to absorb transactions without downsizing," this investment banker said.

India's IPO pipeline currently has a few big IPOs whose DRHPs have already been filed. These include SBI Funds Management Ltd, InCred Holdings Ltd, Manipal Health Enterprises Ltd, Sterlite Electric Ltd, and UPL arm Advanta Enterprises Ltd.

Despite global uncertainty and risk aversion, 2026 saw the listing of 20 mainboard companies, collectively raising around ₹20,000 crore. This was broadly in line with 2025, when 10 listings raised a similar amount.

While overall capital raised was comparable across both years, the composition differed meaningfully. The year 2025 was characterized by larger issue sizes, with offerings such as Hexaware Technologies contributing significantly to aggregate proceeds. In contrast, 2026 saw a greater number of smaller-sized issues, with the largest listing being Clean Max Enviro Energy Solutions Ltd's ₹3,080 crore offer.

IPO lawyers that Mint spoke to said that firms facing demand issues prefer to defer the public offering entirely rather than proceed with a smaller capital raise. But this relaxation might Help a select few companies that use IPOs to execute private equity (PE) fund exits.

Where the rule could matter

"This particular relaxation is quite useful for issuers who may face pressure on valuation in the short term but still view an IPO and consequent listing as an important milestone," Vishal Yaduvanshi, partner and regional co-head of capital markets - north at Cyril Amarchand Mangaldas, said. "Such issuers can now reduce the issue size by a larger extent. This helps them to proceed with listing at lower than expected valuation, by reducing the dilutive impact of the offering on the cap table."

Amit Tungare, managing partner at Asahi Legal, said the primary beneficiaries of the relaxation will ideally be growth-stage companies with flexible capex requirements and those navigating volatile sector valuations.

The investment banker quoted earlier in the story said that, though no company they know of is currently reducing their offer sizes by 50%, a clearer picture can only be painted after June, when the current lull in the IPO market will be broken by updated offer documents with March-end financials.

Agnidev Bhattacharya

Agnidev is a business journalist with over two years of reporting experience tracking the intersection of capital, policy, and corporate strategy in India.He joined Mint in December 2025, after a stint at NDTV Profit (erstwhile BQ Prime). At Mint, Agnidev focuses on the high-stakes world of the Indian capital market, specialising in mergers and acquisitions, burgeoning IPOs, and the investment banking industry.Backed by a rigorous, data-driven approach, Agnidev frequently breaks news on the valuation cycles, deal pipelines and listing strategies of India’s most prominent companies. His reportage offers deep dives into the operational health of market leaders across the corporate landscape, providing readers with a clear-eyed view of institutional growth.He has reported on major issues like India's derivatives frenzy, IPO froth, the competitive quick commerce industry, the real-money gaming ban, and has broken investigative stories related to scandals such as IndusInd Bank's accounting manipulation and the Gensol-BluSmart fiasco.As a reporter, he brings stories that ultimately affect your stock market investments, and tries to bring clarity and brevity in a field that is often filled with jargon and noise.