Decoding India’s IPO Market FY 2025–26: Insights and Expectations

FY 2025–26 was a landmark year for India’s primary markets. Fundraising on the mainboard reached record levels, even as post-listing erformance moderated and investors became more selective.

Despite global challenges such as geopolitical tensions, changing interest rates, and volatile FII flows, strong domestic liquidity, steady mutual fund inflows, and policy support kept the IPO pipeline active across both mainboard and SME segments.

The year also showed how the market is maturing. Investors increasingly favored companies with strong governance, steady cash flows, transparent disclosures, and clear growth visibility. Companies with high valuations but weak fundamentals saw corrections, leading to a more disciplined environment. While total capital raised hit new highs, average listing gains were lower compared to the strong performance seen in earlier years.

Below is a data-backed sector review, key themes, and an outlook for FY 2026–27.

Market Overview: FY 2025–26 in Summary

Key numerical highlights:

• 96 Mainboard IPOs in FY 2025–26
• ₹1.66 lakh crore raised through mainboard issues
• 217 SME IPOs during the year
• ₹9,600 crore+ mobilized on SME platforms
• 64 percent of mainboard IPOs listed with gains
• 62 percent of SME IPOs delivered listing gains
• Median IPO P/E range: 20 to 24x
• Average subscription levels: QIB ~18x, NII ~22x, Retail ~6x

What defined the year:

• Strong domestic mutual fund and retail participation
• Increasing institutional appetite for high-quality mid-caps
• Valuation discipline from investors
• Faster regulatory turnaround due to stronger disclosures
• SME issuance remained robust with more mature promoters

While global uncertainty influenced sentiment, domestic fundamentals anchored market strength.

Sectoral Review

1. Healthcare and Life Sciences

A consistent outperformer.

• Hospitals reported 8 to 14% volume growth
• Diagnostics delivered double-digit margin expansion
• CDMO and speciality pharma maintained strong order visibility

The sector continued shifting from defensive to structural growth.

2. Industrials and Manufacturing

Supported by:

• Public capex increasing over 20% year-on-year
• Private capex revival in core sectors
• PLI-led expansion in electronics, chemicals and auto components

Export-oriented companies and those with backward integration commanded premium valuations.

3. Renewables and Power

One of the year’s strongest momentum segments.

• Renewable capacity crossed 214 GW
• Transmission investments grew 11%
• EPC companies saw order books expand to 1.5 to 3 times annual revenue

Investor interest remained high due to policy stability and strong demand outlook.

4. Financial Services

A divergent year.

• Well-governed NBFCs grew AUM by 14 to 18%
• Weaker players experienced 10 to 20% valuation pressure
• Fintech lending stabilized under tighter regulatory supervision

Performance strongly correlated with governance and asset quality.

5. Technology and Digital Businesses

Selective recovery continued.

• Profitable tech saw valuation improvement of 12 to 15%
• B2B platforms and subscription-led businesses gained investor favor
• High-burn models remained out of focus

Fundamentals and sustainability outweighed growth narratives.

6. Consumption and Retail

A stable year with sector rotation.

• Premium retail grew 15 to 20%
• Mass retail segments softened under inflation pressures
• D2C categories consolidated, preparing for structured capital raises

Niche and specialty formats continued to attract institutional interest.

Key Themes That Emerged

1. Higher governance and disclosure readiness

Issuers entered the pipeline with cleaner reporting, stronger internal controls and more credible risk statements.

2. Rational valuation trends

Investors favored companies with predictable earnings and penalized optimism lacking visibility.

3. DRHP quality improved

Better financial commentary, clarity on related-party transactions and upgraded internal processes supported quicker reviews.

4. Strategic timing by promoters

Over 40 percent of issuers aligned their IPOs with strong quarterly results, resulting in stronger subscription traction.

5. SME IPOs grew in quality

Institutional participation nearly doubled from 6% to 12%, improving deal maturity and governance standards.

What to Expect in Fy 2026–27

1. Broader sector diversity

Renewables, healthcare, engineering services, digital infrastructure and niche manufacturing are expected to dominate market activity.

2. Increased institutional involvement

Domestic institutions will likely anchor more issuances as global liquidity remains inconsistent.

3. Stricter focus on profitability

Companies without clear paths to sustainable EBITDA growth will face selective valuation outcomes.

4. Strength in mid-sized, well-governed players

Mid-market issuers with disciplined financials and clearer visibility are expected to outperform.

5. Faster deal timelines

Improved preparedness and DRHP quality will shorten regulatory and marketing cycles.

6. Continued momentum in Mainboard markets

Mainboard activity is expected to stay strong as more promoter groups strengthen governance systems and commit to long-term compliance.

Overall Perspective

FY 2026–27 will reward companies that prioritize readiness, compliance and transparent reporting. Businesses with strong governance systems, credible financials and clear strategic communication will be best positioned to secure premium valuations and long-term institutional confidence.