Indian IPO Market Reignites: Robust Pipeline, Strong Listings, and a Sentiment-Driven Surge

After a quiet spell earlier in the year, India’s primary markets are witnessing a renewed burst of activity. The month of July has already signaled a decisive shift in momentum, with equity markets stabilizing and investor confidence rebounding. With several IPOs lined up and listing gains showing strong early signs, the country’s IPO landscape is once again in focus.

A Promising Start to H2 2025

July is shaping up to be one of the most active months for Indian IPOs since December 2024. Investment bankers estimate that Indian firms could raise around $2.4 billion through public offerings this month, surpassing the $2 billion raised in June, most of which was contributed by HDB Financial Services’ ₹12,500 crore mega-IPO.

What’s notable is that in just the first three trading days of July, six companies debuted on the exchanges, compared to five listings throughout June. This acceleration is particularly significant given the subdued activity in March and April, when broader market volatility and global headwinds kept many issuers on the sidelines.

Sentiment Fuels Supply

The revival in the IPO market appears closely tied to broader market sentiment. Since May-end, the Nifty 50 has reclaimed the 25,000 mark, instilling optimism among issuers and investors alike. Historically, IPOs have been timed to align with positive momentum in secondary markets — and July’s listings underscore this trend. Investor appetite for new offerings is clearly returning, with average listing gains in July so far at around 16%, a sharp recovery from the tepid 1% average seen in June.

This rally in IPOs is not coincidental. May had offered the first signs of life post the two-month hiatus, with listing gains in the 10% range encouraging issuers to reenter the market. With large issues like HDB Financial and credible names like NSDL, Credila Financial Services, and Aditya Infotech expected to go public this month, the momentum is set to continue.

The Thick Pipeline Ahead

According to market sources and databases, over 50 companies have already secured regulatory approval from SEBI for their IPOs. Some of the key names in the pipeline include:

• Credila Financial Services, targeting an estimated $584 million
• NSDL, looking to raise about $400 million
• JSW Cement and defence firm SMPP, with potential offerings around $470 million each
• LG Electronics India, eyeing a massive $1.8 billion issue

Collectively, the pipeline of planned IPOs is pegged at $26 billion across 143 companies, setting the stage for an active second half if market conditions remain supportive.

Caution Beneath the Euphoria

While the numbers suggest a revival, market experts advise caution. Much of the investor enthusiasm in the primary market is driven by the lure of listing gains rather than long-term conviction. Retail investors, in particular, have shown a tendency to chase IPOs for short-term profits, sometimes at the cost of their long-term portfolios.

There are growing concerns that this shift in capital from mutual funds to IPOs could strain liquidity in the secondary markets. Mutual fund flows have notably slowed in recent months, even as IPO oversubscriptions—especially from retail segments—have soared. If this trend deepens, it may weaken the broader market’s support structure and make it more dependent on short bursts of momentum.

Additionally, the upcoming Q1 FY26 earnings season is expected to play a critical role. Analysts have increasingly been lowering earnings expectations due to patchy urban demand and plateauing margin expansion. While rural consumption may get a boost from a favorable monsoon, corporate results will need to reflect tangible revenue growth to sustain the current optimism.

If earnings disappoint, sentiment-driven IPO activity may face a reality check, potentially delaying or downsizing future issues.

SMEs, Regulatory Caution, and Long-Term Thinking

The surge in IPOs isn’t limited to large-cap firms. SME IPOs have also picked up pace, though their trajectory is nuanced. While they were relatively unaffected during the earlier slowdown, concerns have emerged around potential speculative trading and price manipulation in this space. Regulatory oversight has increased, which could lead to tighter norms and slower flows in the coming quarters.

For long-term investors, the key lies in separating hype from fundamentals. Not every IPO that delivers strong listing gains sustains those levels in the medium to long term. Past cycles have seen overvalued IPOs lose steam post listing, hurting retail investors who entered without a long-term view.

A Market at the Crossroads

India’s IPO market is clearly back in motion, but its sustainability hinges on more than sentiment. Strong corporate earnings, continued domestic liquidity, and prudent investor behavior will determine whether this momentum carries into the latter half of the year.

While the pipeline is deep and investor appetite is rising, the next few months will test whether this rebound is a temporary wave or the beginning of another record-breaking year in Indian capital markets.

Market this week

Source: BSE and NSE

• Indian benchmark indices snapped a two-week winning streak in the week ended July 4, amid volatility and caution ahead of the impending U.S. tariff deadline.
• On the sectoral front, Nifty Realty declined 2%, while Nifty Bank and Nifty FMCG fell 0.7% each.
• In contrast, Nifty Pharma and Nifty PSU Bank indices gained 2% each, and Nifty IT and Nifty Media rose nearly 1% apiece.
• Foreign Institutional Investors (FIIs) turned net sellers after two weeks of buying, offloading equities worth ₹6,604.56 crore.
• Meanwhile, Domestic Institutional Investors (DIIs) extended their buying streak for the 11th straight week, investing ₹7,609.42 crore in equities.

Weekly Leaderboard

Source: BSE

Stocks that made the news this week:

Shares of city gas distributors Indraprastha Gas Ltd (IGL) and Mahanagar Gas Ltd (MGL) rose up to 3.5% on July 4 after the Petroleum and Natural Gas Regulatory Board (PNGRB) approved key reforms under the Natural Gas Pipeline Tariff Regulations, 2025. These include reducing the number of unified tariff zones from three to two and extending the benefit of Zone 1 tariffs nationwide for CNG and PNG users. The reforms also mandate pipeline operators to secure 75% of their system-use gas via long-term contracts (minimum three years) and introduce a Pipeline Development Reserve, allocating 50% of surplus profits for infrastructure upgrades and the other half toward consumer tariff relief.

Sapphire Foods surged over 9% after reports suggested that Yum! Brands is exploring a potential merger between its Indian franchise partners, Sapphire Foods and Devyani International Ltd. The move could see Devyani acquiring all KFC and Pizza Hut franchise rights currently held by Sapphire, or alternatively, consolidate all KFC operations under its brand. A proposed share swap ratio of 1:3 is under consideration, offering one Devyani share for every three Sapphire shares, according to sources cited in the report.

Marico Ltd climbed over 4% following a positive Q1 FY26 business update. The FMCG major highlighted steady urban consumption and signs of rural demand recovery, aided by easing inflation and expectations of a good monsoon. While Parachute volumes softened slightly due to high input costs and ml-age adjustments, Saffola Oils delivered strong revenue growth in the high 20s, supported by mid-single-digit volume growth and price reductions after import duty cuts. The company remains optimistic about gradual improvement in coming quarters.