The Indian Initial Public Offering (IPO) market has recently experienced a notable slowdown, a stark contrast to the robust demand from retail investors seen in prior years. As a result of an ongoing downturn in the secondary market, many companies are postponing their listing plans due to a growing aversion to risky assets. Alongside this, stricter regulations enforced by the Securities and Exchange Board of India (SEBI) regarding disclosures and pricing have led firms to reevaluate their IPO schedules.
Retail Investor Confidence Dips
Retail investor confidence has taken a hit, with the Indian stock market facing its most significant decline in five years. Companies that have managed to raise funds over the past two months are witnessing tepid demand for their IPOs. The subscriptions from retail investors—typically the backbone of new offerings—have been disappointingly low compared to previous years, mirroring a cautious market sentiment.
March Listings at a Record Low
In March alone, only 10 companies have successfully raised funds across both mainboard and SME segments, with a couple more set to list shortly. This brings March’s total to just 12 listings, marking the lowest monthly count in two years. The previous low was recorded in April 2023, with only 10 IPOs making their debut during that time, as reported by Trendlyne.
2024 was a banner year for new IPOs, with an impressive 340 companies debuting, fueled by favorable market conditions. The momentum carried into early 2025, with 29 IPOs in January. However, the enthusiasm waned in February due to escalating global trade tensions, which resulted in a sharp sell-off in domestic equities, erasing billions in retail wealth and prompting investors to adopt a more cautious, wait-and-see strategy.
Weak Performance of March IPOs
The performance of March’s IPOs has been lackluster, with 90% trading below their issue prices. This indicates a significant decline in subscription levels during bidding periods. Unlike previous trends where companies enjoyed overwhelming investor interest, this month saw only eight IPOs with subscriptions between 1x and 2x. Two others fared slightly better, with subscriptions at 3.8x and 5.1x respectively.
- Shreenath Paper Products is currently the worst performer, trading at a staggering 60% discount to its IPO price.
- PDP Shipping & Projects and NAPS Global follow closely, both trading 40% below their initial prices.
- Several others, including Nukleus Office Solutions and Divine Hira Jewellers, have seen declines ranging from 20% to 30%.
Overall, 43 out of 60 IPOs in 2025 are trading below their issue prices, highlighting a troubling trend.
Stricter Regulations on Listings Ahead
In response to the challenges in the IPO landscape, SEBI is set to implement stricter regulations concerning post-listing obligations and disclosures. By early April, amendments to the Listing Obligations and Disclosure Requirements (LODR) Regulations are expected. These changes aim to tighten disclosure norms for SMEs listed on dedicated stock exchanges, following numerous instances of irregularities within the sector.
Earlier this month, SEBI also modified the Issue of Capital and Disclosure Requirements (ICDR) norms, increasing the minimum application size to two lots and enhancing oversight on fund utilization. Additionally, there are new restrictions on the use of IPO proceeds for repaying loans to related parties.
Looking Ahead
As the Indian IPO market navigates through this challenging period, stakeholders are keenly watching for signs of recovery. With SEBI’s tightening of regulations and a cautious retail investor base, the path forward may require innovative strategies and renewed confidence among investors.
