The initial public offering market has entered a phase of stagnation, with no major IPOs launched in the past three weeks. The last significant IPO was Quality Power, which opened for subscription on February 14, 2025. Since then, the primary market has seen a lull, raising concerns about investor sentiment and market conditions.Despite speculation surrounding Tata Capital’s anticipated $11 billion IPO, which is expected to be one of the largest listings of the year, the overall slowdown in IPO activity suggests that companies are hesitant to go public amid increasing market volatility.
Decline in IPO Filings and Market Hesitation
The number of companies filing for IPOs has seen a sharp decline. In February 2025, only 14 companies submitted their draft red herring prospectus (DRHP), a significant drop from 29 filings in January. This marks the lowest number of filings since November 2024.Collectively, these 14 companies aimed to raise ₹9,695 crore, making it the smallest fundraising amount recorded in the past nine months. The decline in DRHP filings indicates that companies are becoming increasingly cautious about going public, likely due to unstable market conditions.A DRHP is a crucial document submitted before an IPO, providing potential investors with key financial details, risk factors, and the structure of share offerings. A drop in filings suggests that companies are uncertain about whether the current market environment can support successful listings.
Reasons Behind IPO Delays and Market Volatility
Several companies that have already received approval from the Securities and Exchange Board of India (SEBI) have opted to delay their IPOs. There are three primary reasons for this hesitation:
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Uncertain Global Market Conditions – The ongoing trade disputes and tariff wars, particularly those linked to former US President Donald Trump’s policies, have contributed to economic uncertainty. Many companies prefer to wait for a more stable global financial outlook before launching their IPOs.
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Foreign Institutional Investor (FII) Selling – The continued selling pressure from foreign investors has affected stock market stability in India. With FIIs pulling out funds due to high stock valuations and global economic concerns, stock prices have been volatile, making it difficult for companies to attract investors for new IPOs.
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Market Sentiment and Weak IPO Performance – Many companies are reluctant to enter the market due to weak investor sentiment, lower grey market premiums, and the poor performance of recently listed stocks. Investors, especially retail traders, are less enthusiastic about IPOs due to a downtrend in the stock market.
Impact on Pending IPOs and Market Strategy
According to market data, 26 companies have already secured SEBI approval to raise ₹43,000 crore between April and December 2024, yet they have chosen not to launch their IPOs. The hesitation stems from concerns about poor market conditions and declining subscription levels.Raghvendra Nath, MD of Ladderup Wealth, highlighted that 2023 was a record-breaking year for IPO fundraising. IPOs were oversubscribed 26.6 times on average, attracting total investments worth ₹46.7 trillion against an offer size of ₹1.8 trillion. In 2024, 236 SME IPOs saw an average oversubscription of 165 times, reflecting immense interest in IPOs during a bull market.
However, Nath pointed out that IPOs usually thrive in rising markets. When stock indices fall 15-25% from their peak, companies tend to delay IPO plans to avoid disappointing investors. Weak investor sentiment has led many businesses to reconsider their valuation and pricing strategies before launching their IPOs.At present, 44 companies have SEBI approval for public listings, but most of them have decided to wait for a market rebound. Some companies are even considering reducing their IPO sizes or adjusting their valuation expectations to attract investors once conditions improve.Kranthi Bathini, director of equity strategy at WealthMills Securities, observed that retail investor enthusiasm for IPOs has faded.During a bull market, IPOs attract widespread interest, as investors subscribe in hopes of securing quick listing gains. However, with current market uncertainties, enthusiasm has waned significantly. Many retail investors rely on short-term IPO gains, but with stock prices facing downward pressure, the incentive to participate in new listings has diminished.
Future Outlook for the IPO Market
The IPO slowdown is a direct result of global market instability, investor uncertainty, and stock market volatility. As companies reassess their public listing strategies, the timing of future IPOs will largely depend on market conditions and investor sentiment.While major IPOs such as Tata Capital’s $11 billion listing could potentially revive the market, most companies remain cautious. The possibility of reduced valuations, smaller IPO sizes, and strategic delays will likely define IPO activity in the coming months.For now, companies awaiting a favorable market turnaround will need to carefully evaluate economic trends, investor confidence, and stock market performance before proceeding with their IPO plans. The coming months will determine whether the IPO market can regain its momentum or if continued uncertainty will lead to further delays in public listings.
