India’s IPO frenzy hits century to break 18-year record — but the era of easy money is over

India’s primary markets have closed the year with a symbolic and historic marker: more than 100 initial public offerings, the highest since 2007, making 2025 one of the most active listing cycles in nearly two decades. This surge is not a short-term burst of enthusiasm; it is the product of broader structural changes reshaping the Indian economy — deeper domestic capital pools, formalisation-driven business expansion, and stronger capital-market infrastructure. A confluence of global and domestic forces created an unusually favourable window, enabling companies across manufacturing, retail, financial services, electric mobility, diagnostics, and niche technology to test the public markets. But even as the IPO counter ticks past a century, the character of fundraising is changing rapidly, hinting that the liquidity-fuelled euphoria of the past 24 months is giving way to a more demanding, valuation-conscious landscape.

A Record Year Built on Domestic Liquidity and Diversifying Sectors

Unlike previous IPO booms that were dominated by a few sectors — infrastructure in 2007, tech and new-age companies in 2021 — the 2025 frenzy has been notably broad-based. Traditional sectors such as cement, logistics, auto components, and textiles returned strongly, buoyed by capex-linked growth. At the same time, consumer-facing brands and fintech-lite platforms sought listings to convert scale into market visibility. The most defining force, however, has been the extraordinary depth of domestic capital. Systematic investment plans (SIPs) continued to receive ₹20,000 crore-plus inflows monthly, providing institutions with steady purchasing power. Retail participation also surged, thanks to easier digital onboarding and a new generation of investors who increasingly treat equity markets as a wealth-creation avenue rather than a speculative playground.

The depth of domestic demand allowed issuers to command rich valuations, a trend amplified by global capital flows. Geopolitical uncertainty — from US rate fluctuations to Europe’s slow growth — made India a relative safe haven. FIIs, even when selectively cautious, remained net buyers in broader Asia. Together, these factors created an environment where even mid-sized companies, which might have struggled to list five years ago, saw enthusiastic oversubscription. SME IPOs, in particular, set records both in number and scale. But these very dynamics set the stage for the correction that now looms.

The Market Turns: Valuation Fatigue, Tighter Liquidity and Wary Investors

The sharp reversal in sentiment began subtly. Grey-market premiums — long used as indicators of retail exuberance — started to cool, especially in SME listings. Several high-profile IPOs listed flat or below issue price, revealing a fatigue previously masked by liquidity. Institutional investors began pushing back against inflated pricing, demanding evidence of cash-flow stability instead of promise-driven narratives. Meanwhile, the global macro environment shifted: US bond yields hardened, capital costs rose across Asia, and domestic liquidity tightened as banks and mutual funds became more selective.

The shift has been particularly visible in post-listing performance. A third of recent mainboard listings underperformed benchmark indices within the first month — a contrast to the near-automatic “pop” enjoyed during peak euphoria. In SME markets, regulators have identified abnormal trading patterns, prompting heightened scrutiny and surveillance. This has had a cooling effect on speculative demand while encouraging investors to differentiate sharply between quality issuers and opportunistic entrants. For companies planning to ride the momentum of 2023–2024, the message is unambiguous: the window is still open, but the floodgates have closed.

A Turning Point: From a Liquidity-Driven Boom to a Fundamentals-Driven Cycle

India’s IPO cycle is not ending — it is maturing. The exuberance that pushed even marginal companies to test the market is being replaced by a discipline-centered regime. Promoters can no longer assume aggressive pricing will be absorbed. Investors are less forgiving, demanding governance transparency, stable earnings, and a credible growth runway. The role of domestic institutions will become even more central; they will shape valuations more than retail exuberance or FII sentiment. Regulatory tightening in SME markets — from additional disclosure to pattern audits — will ensure that quality screens strengthen, reducing volatility and protecting smaller investors.

Looking ahead, India’s listing pipeline remains healthy, but the character of participation will shift. In an environment of rising global risk, capital will chase durable businesses rather than thematic fads. Sectors such as renewable energy components, AI-enabled industrial solutions, speciality chemicals, and logistics infrastructure may dominate the next wave. But promotional stories wrapped in frothy valuations will meet resistance, not exuberance.

India hitting 100 IPOs is both a milestone and a marker of transition. It demonstrates the depth and hunger of domestic capital, the widening of the country’s entrepreneurial base, and the confidence with which companies now approach public markets. Yet it also signals the end of the past two years’ easy-money momentum. The next phase will reward discipline, not exuberance; performance, not promises. In that sense, India’s record-breaking year is not the peak of a cycle but the beginning of a more mature, fundamentals-first capital market.