The primary markets have been experiencing a slowdown in recent weeks, primarily due to delays in launching initial public offerings (IPOs). Despite 26 companies having received approval from the Securities and Exchange Board of India (SEBI) to raise up to ₹43,000 crore in the first three quarters of FY2025, many of these companies have either postponed or shelved their IPO plans. The last major mainboard IPO, Quality Power Electrical Equipments, opened for subscription on February 14.
IPO Pipeline Continues to Grow
Among the 26 companies that have received SEBI approval for their IPOs, prominent names include Schloss Bangalore Ltd (₹5,000 crore), Ather Energy Ltd (₹4,500 crore), NSDL (₹3,000 crore), and Avanse Financial Services Ltd (₹3,500 crore). However, despite the approval, the number of companies filing Draft Red Herring Prospectuses (DRHP) — the initial documents required for SEBI approval before launching an IPO — has been declining. In January 2025, 29 companies filed DRHPs, while in February 2025, the number dropped to just 14.
This decline in filings and IPO delays follow a record fundraising year in 2024, when companies raised ₹1.6 lakh crorethrough IPOs. However, this year, the IPO pipeline is growing larger as delays continue to hinder the launch of new issues.
Why Are Companies Delaying Their IPOs?
Experts point to market volatility and lackluster IPO subscriptions as the primary reasons behind the delay in IPO launches. Despite receiving regulatory approvals, companies are choosing to hold off on launching their IPOs due to the weak market sentiment and the challenging environment for IPOs.
Weak Market Sentiment
The domestic stock markets have seen significant declines recently, with the NIFTY50 and SENSEX falling by 15.02%and 14.28%, respectively, over the past five months. The weak Q3 earnings season, a significant sell-off by foreign portfolio investors (FPIs), and ongoing concerns over global trade tensions have weakened investor sentiment. As a result, market confidence has taken a hit, and IPOs often perform better when the broader market is in a positive phase, with high investor confidence driving large subscriptions.
Recent IPOs have had a hard time listing at a premium. For instance, Ajax Engineering and Dr Agarwals HealthcareIPOs listed at a discount last month. The ₹8,750 crore Hexaware Technologies IPO was subscribed 2.79 times, with most of the demand coming from institutional investors. The retail category for Hexaware was only 11% subscribed, showing a lack of enthusiasm among retail investors.
The Waiting Game
With market conditions remaining uncertain, companies are choosing to delay their IPOs until the market improves. After receiving SEBI approval, companies typically have one year to launch their IPOs without letting the approval lapse. Some companies may even consider reducing the size of their IPO or lowering their valuations in order to make their offers more attractive to investors.
What’s Next for the Primary Markets?
Despite the current market volatility, more than 70 companies are still awaiting approval to launch their IPOs. Experts predict that in 2025, companies may raise over ₹1.82 lakh crore through IPOs. Some of the notable upcoming IPOs include companies like Tata Capital, LG Electronics India, HDB Financial Services, and Reliance Jio.
As market conditions stabilize and investor confidence improves, IPO activity is expected to pick up, and the primary market could regain momentum in the near future. However, for now, companies appear to be taking a cautious approach, waiting for the right time to enter the market.
