India's primary market scripted history in 2025, with IPO fundraising hitting an all-time high of ₹1.76 lakh crore even as signs of valuation fatigue and moderating investor enthusiasm emerged beneath the headline numbers. This marks the first time in India's history that IPO fundraising has achieved record highs for two consecutive years, breaking the traditional pattern where bumper IPO years were followed by 2-3 year lulls.

Record Breaking Performance Amid Market Moderation

A total of 103 companies tapped the mainboard markets in 2025, surpassing the previous high of ₹1.60 lakh crore achieved by 91 companies in 2024. However, despite record IPO numbers, overall public equity fundraising declined 18% year-on-year to ₹3.06 lakh crore from ₹3.74 lakh crore in 2024, dragged down by weaker activity in QIPs, FPOs and OFS transactions.

Promoter Exits Dominate Market Structure

The 2025 IPO landscape was characterized by significant promoter and investor exits rather than fresh capital raising. Offers for sale by private promoters accounted for 45% of total IPO proceeds at ₹79,030 crore, while fresh capital raised formed just 37% at ₹64,406 crore. PE/VC exits contributed another 12% at ₹20,643 crore, highlighting the exit-heavy nature of the current IPO cycle.

Major Deals and Market Reception

The largest IPO of 2025 was Tata Capital, which raised ₹15,512 crore, followed by HDB Financial Services at ₹12,500 crore and LG Electronics India at ₹11,605 crore. The smallest offering was Jinkushal Industries at ₹116 crore. LG Electronics India drew peak retail interest with 54.49 lakh applications, followed by Meesho with 54.12 lakh applications and Standard Glass Lining Technology with 49.34 lakh applications.

Investor Sentiment Shows Moderation

Despite record fundraising, several indicators pointed to cooling investor enthusiasm. Average listing gains fell sharply to 10% in 2025 from 30% in 2024. The average number of retail applications per IPO dropped to 14.99 lakh from 18.87 lakh in 2024. The number of shares applied for by the retail segment by value at ₹2.95 lakh crore was 68% higher than the total IPO mobilization, compared to 113% higher in 2024, showing reduced enthusiasm from retail investors during the year.

Robust Pipeline Signals Strong 2026 Activity

India's primary market is entering 2026 with one of its deepest pipelines on record. As of December 19, SEBI approvals remain valid for around 95 companies planning to raise nearly ₹1.26 lakh crore through IPOs. Additionally, about 103 companies have filed their offer documents and are awaiting regulatory clearance to raise roughly ₹1.39 lakh crore, creating a combined pipeline of ₹2.65 lakh crore.

The pipeline is increasingly skewed towards sizeable deals, with companies like SMPP, Continuum Green Energy, Credila Financial Services, Dorf-Ketal Chemicals, Juniper Green Energy and Clean Max Enviro Energy Solutions among those with proposed issue sizes of ₹3,000 crore or more. Several large issuers have already entered the regulatory queue, including digital payments firm PhonePe planning to raise ₹11,000 crore and power generation firm Avaada Electro targeting around ₹10,000 crore.

Market Outlook and Sectoral Trends

Investment bankers expect IPO momentum to sustain through 2026, supported by improving earnings visibility across financial services, manufacturing, consumption and new-age businesses. The market is witnessing growing appetite for larger issues, with domestic institutional investors playing an increasingly important role in underwriting scale. For the first time in 2025, mutual funds emerged as the largest anchor investors, subscribing to 14.44% of issue amounts, marginally ahead of FPIs at 13.99%.

Sectorally, multinational parent-led listings and divestments are expected to remain a steady source of supply, while renewables and energy transmission platforms are likely to be active. Healthcare is anticipated to see sustained issuance across multi-specialty hospital chains and scaled single-specialty platforms. However, the market is entering a more discerning phase, with investors increasingly focused on clearer earnings visibility, capital discipline and governance standards.

India's Chief Economic Advisor (CEA), V Anantha Nageswaran, has raised concerns about the evolving nature of Initial Public Offerings (IPOs) in the country's capital markets. In a statement that has caught the attention of market watchers, Nageswaran highlighted a significant shift in the purpose of IPOs.

IPOs: From Capital Raising to Exit Strategy

According to the CEA, IPOs are increasingly being used as exit vehicles for early investors rather than serving their traditional purpose of raising long-term capital for companies. This trend, Nageswaran argues, undermines the fundamental spirit of public markets.

Call for Evolution in Capital Markets

Nageswaran emphasized the need for India's capital markets to evolve beyond mere scale. He cautioned against celebrating what he termed as "wrong milestones," specifically pointing out:

• Market capitalization
• Derivative trading volumes

The CEA warned that focusing on these metrics could lead to a diversion of savings from productive investments, potentially impacting the broader economy.

Implications for Investors and Companies

This shift in the purpose of IPOs could have significant implications:

1. For investors: It may mean a change in the quality and long-term prospects of companies going public.
2. For companies: It might signal a need to reassess their approach to public listings and long-term capital raising strategies.

The Way Forward

Nageswaran's comments underscore the need for a balanced approach in the capital markets. While the growth of India's capital markets is a positive sign, the CEA's warnings suggest that quality and purpose should not be overshadowed by quantity and scale.

As the Indian capital market continues to evolve, regulators, companies, and investors alike may need to recalibrate their strategies to ensure that public markets continue to serve their fundamental purpose of facilitating long-term capital formation and economic growth.