IPO boom meets investor caution as FY26 signals more mature market: Report

India's IPO market raised a record ₹1.9 trn in FY26, but listing gains and subscription levels fell as investors became more selective on valuations, governance and earnings quality, finds report

India’s IPO market had a record year in FY26, but investors were becoming more selective, according to a new report. A total of 366 IPOs across the mainboard and SME platforms raised about ₹1.9 trillion, with mainboard IPOs alone raising about ₹1.77 trillion.

 

According to Grant Thornton Bharat’s IPOs in India FY2026 report, the market was shifting from momentum-driven investing to greater selectivity as capital was still available, backed by strong domestic participation and a growing investor base, but investors were looking more closely at valuations, earnings visibility, governance, cash flows and the underlying quality of businesses. India accounted for 14 per cent of global IPO listings in March 2026, second only to China. The report also notes that India now has more than 225 million demat accounts, underlining the growing depth of domestic participation.

 

Record fundraising, but weaker listing gains

The report highlighted the contrast between FY25 and FY26. While the mainboard IPOs increased from 80 to 109, the funds raised rose from ₹1.63 trillion to ₹1.77 trillion. However, average oversubscription fell to 39 times from 71 times, while average listing-day gains dropped to 7 per cent from 29 per cent. Average annual listing performance, measured as of March 31 of the listing year, was negative 17 per cent in FY26 compared with negative 13 per cent in FY25.

 

According to the report, the second and third quarters were the strongest, with Q2 raising ₹511 billion and Q3 a record ₹953 billion. Together, they accounted for about 83 per cent of FY26 fundraising.

 

"In today's IPO market, success is no longer defined by the ability to list, but by the readiness to operate as a public company with the governance, discipline and credibility to sustain investor confidence well beyond the listing day," said Karan Marwah, Partner and CFO Advisory Leader, Grant Thornton Bharat.

Bigger did not automatically mean better

The report highlighted that the market also became less forgiving of smaller IPOs. Companies raising less than ₹5 billion recorded average listing gains of just 2 per cent in FY26, compared with 33 per cent in FY25. Their average issue expenses remained high at 9.7 per cent of issue size. Medium and large IPOs did better, with average listing gains of about 11 per cent, although the report cautions that size alone did not guarantee stronger performance.

 

The structure of fundraising is changing too. Offer for Sale continued to dominate, accounting for 61 per cent of mainboard IPO proceeds. However, the fresh issue component increased to 39 per cent from 35 per cent in FY25, indicating a gradual return towards raising capital for business growth rather than promoter or investor exits.

 

Investors are also paying closer attention to where fresh capital goes, the report noted. Debt repayment accounted for 26 per cent of fresh issue proceeds, while 21 per cent went towards capex, expansion, upgrading or acquisitions. The report says the deployment of proceeds is increasingly being viewed as a test of management intent and IPO quality.

Sector choice matters more

The report showed that financial services led fundraising with ₹598 billion across 12 IPOs. Consumer services raised ₹259 billion across 10 issues, while consumer durables raised ₹169 billion across nine. By contrast, power, telecom and textiles saw weak or negative listing performance. The report says investors are increasingly concentrating capital in sectors with stronger earnings visibility, structural growth prospects and valuations they are comfortable with.

Being IPO-ready now means more than financials

The report underlined that being ready for an IPO increasingly means being ready to function as a public company. Grant Thornton Bharat identifies financial performance, earnings quality, governance and compliance, use of proceeds, valuation discipline, investor communication and workforce readiness as key internal readiness indicators. On the market side, companies need to consider liquidity, recent IPO performance, sector momentum, macroeconomic stability, regulatory clarity and investor interest.

 

For FY27, Grant Thornton Bharat identifies six factors that could determine the success of issuers: market timing, valuation discipline, governance readiness, earnings visibility, quality of institutional demand and post-listing communication. It assesses that the IPO pipeline remains active, but companies will have narrower windows in which investors are willing to pay up.