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In the first nine months of FY26, the IPO market in India performed well despite global economic and geopolitical challenges. Strong company fundamentals and sector-specific opportunities drove the primary market more than short-term movements in stock indices.
While global equity markets recorded solid gains, Indian benchmarks delivered relatively modest returns. The only exception being the IPO market, which saw new listings, supported by domestic liquidity and investor interest. Mutual funds, insurance companies, and regular retail investors provided steady demand. As the investor base grew, the market could absorb new IPOs, even during volatile periods.
In the first nine months of FY26, 94 companies raised about INR 1.6 trillion through mainboard IPOs. This was similar to FY25 and much higher than FY24. Average deal sizes declined as more mid-sized companies entered the market. Listing-day gains fell sharply compared to the strong gains seen in FY24 and FY25.
There is also a change in investor behaviour. Investors are now more careful about valuations and clearly differentiate between companies. They favour businesses with strong earnings visibility, healthy balance sheets, and clear capital-use plans. Markets have punished aggressively priced IPOs, while well-governed companies with scale and credible growth plans continue to attract strong institutional interest.
In the first nine months of FY26, Offers for Sale (OFS) made up most IPO proceeds, but their share fell compared to FY25. Companies raised more money through fresh issues. This shows that investors now prefer IPOs that support business growth rather than just shareholder exits. IPO proceeds were largely utilised for debt reduction, along with investments in capex, capacity expansion, and working capital. This signals that investors are rewarding issuers who clearly explain how IPO funds will strengthen their business and support future growth.
The financial services sector led IPO fundraising. Consumer services, capital goods, healthcare, and consumer durables also saw steady activity due to strong domestic demand, government spending, and long-term growth. Investors seemed less interested in sectors impacted by commodity price swings, regulatory issues, or global trade pressures, such as oil & gas, telecom, metals, and export-focused businesses. Credibility mattered most across sectors. Investors favoured disciplined pricing, strong governance, and clear alignment between strategy and use of funds.
SME IPO activity has shown consistent growth over the last 3 calendar years, with the number of IPOs rising from 195 in FY 24 to 242 in FY 25, and further to 218 in just 9M FY26. More companies listed, issue sizes increased, and investor interest remained high. The SME platform has helped growing businesses enter the market, with some companies later moving to the mainboard. However, high oversubscription in some IPOs, followed by sharp price swings after listing, shows the need for caution. Recent stricter rules and higher requirements for moving to the mainboard should improve overall quality, while allowing strong growth-stage companies to raise capital.
Regulatory changes stabilised the market. SEBI has been pursuing a proactive and progressive reforms agenda. Some key changes made have included improved disclosures, clarified rules on lock-ins and OFS, enhanced KPI reporting, and shortened timelines for rights issues. These changes have made IPO documents clearer and more useful for investors when assessing risk and returns. The Union Budget 2026 supported SEBI’s reforms by strengthening corporate bond markets, simplifying buyback taxes, regulatory incentives for the IFSC GIFT city and encouraging foreign investment. Both regulatory and budget measures are making India’s capital markets transparent, disciplined, and globally competitive.
As FY27 begins, the focus is shifting from listing volume to post-listing performance. While global risks such as geopolitics, tariffs, and volatile capital flows continue to impact markets, strong domestic demand, credible regulation, and a growing investor base are expected to support India’s markets.
The next phase of India’s IPO market will reward issuers that balance sensible pricing with credible growth narratives, transparent capital allocation, and consistent governance practices. Investors will need to stay focused on fundamentals, use of funds, and promoter’s behaviour. India’s IPO market appears to have entered a more mature era. It is less driven by hype and more by fundamentals and is well placed to support long-term capital growth in a changing global environment.
