India’s IPO Market Analyzed

Key Points

• India’s IPO market is maturing with better valuations and practices.
• Most IPO money goes to existing shareholders, not new companies.
• Investor caution is rising, shown by lower subscription rates.
• Realistic IPO pricing is improving, reducing investor risk.
• Loss-making companies are less common in IPOs currently.
• Strong domestic institutional investment is stabilizing the market.

India’s initial public market (IPO) market is undergoing a big change. It used to be very excited and fast, but now it’s becoming more careful and organized, according to an analysis by YES Securities. The main part of the market – where companies first offer shares to the public – is getting better. This means companies are asking for fair prices and following good rules for how they go public.

A big problem is that most of the money raised in IPOs isn’t going to new companies. Instead, it’s mostly going to the people who already own shares in those companies – like promoters and investment groups. In 2025, almost 63% of the money raised came from these existing shareholders through something called an “Offer for Sale” (OFS). This makes you wonder if the IPO boom is truly helping companies grow, or just letting existing owners sell their shares.

YES Securities looked at several recent IPOs to see this happening. Companies like Billionbrains Garage Ventures, Pine Labs, and PhysicsWallah all used OFS transactions to sell shares. These OFS transactions involved selling a large number of shares to existing shareholders, rather than to new investors. The numbers show that a lot of the money is going to the people who already own the company.

Because so much money is going to existing shareholders, investors are being more careful. This is shown by lower “subscription rates.” This means fewer people are willing to buy shares in the IPOs. In 2025, the average subscription rate was 36.46x, compared to 51.23x in 2024. This shows that investors are being more selective and cautious.

The prices of these IPOs are also becoming more reasonable. The average price-to-earnings (P/E) ratio – which measures how much investors are paying for a company’s profits – has fallen to 33.5 times in 2025, down from 42.9 times a year ago. This means companies aren’t asking for as much money, and investors are comfortable with that.

Also, companies that are losing money are less common in IPOs now. Only 8.6% of companies going public are currently losing money, compared to double-digit percentages in the past. This shows that companies are becoming more mature and focusing on profitable growth.

Finally, strong domestic investors, like mutual funds, are supporting the market. They are investing a large amount of money in anchor books – the initial portion of the IPO book allocated to investors. This shows that local money is setting the standard for quality and price, rather than relying on short-term excitement from foreign investors.

Ultimately, a healthy IPO market relies on companies raising fresh capital and maintaining sensible prices.