Frenzy to discipline: IPO mkt matures, but new capital lags promoter exits

India's initial public market (IPO) market is undergoing a significant transformation, moving from a period of speculative frenzy to one of greater discipline, believe analysts at YES Securities.

 

The primary market, it opines, is maturing with healthier valuations and improved listing practices. However, the increasing dominance of offer for sale (OFS) transactions raises questions about whether the current boom is truly fuelling corporate growth or primarily facilitating exits for existing shareholders.

IPO boom overshadows rising OFS

According to a YES Securities’ report, OFS accounted for nearly 63 per cent of total IPO proceeds in 2025, meaning most of the money raised is going to existing shareholders (promoters and PE investors) rather than into the companies.

 

 

This, the brokerage said, raises questions around the extent of fresh capital being infused into businesses.

 

"Sustained market quality will depend on increasing fresh capital issuance and maintaining realistic pricing discipline," said YES Securities.

 

Among the recent mainboard IPOs, Billionbrains Garage Ventures Ltd. IPO (Groww IPO) had an OFS of 557.2 million shares, Pine Labs had an OFS of 82.3 million, PhysicsWallah Ltd. IPO had 34.9 million in OFS, Emmvee Photovoltaic Power had 34.8 million shares in OFS, Fujiyama Power Systems IPO had 10 million shares in OFS, Capillary Technologies India Ltd. IPO had 9.2 million shares in OFS and Excelsoft Technologies Ltd. IPO had 26.7 million shares in OFS. 

 

"The dominance of OFS-driven fundraises points to growing market caution," noted YES Securities.

 

A rise in exits by shareholders, via OFS, has come at a time when India's IPO market is witnessing a sustained, remarkable buoyancy for the second consecutive year.

 

Capital raised has already exceeded ₹1.5 trillion in CY2025, placing it among the strongest years on record. With multiple issues lined up for December, CY2025 is poised to surpass CY2024 in total primary market mobilisation, according to data by YES Securities.

 

However, investor behaviour looks much more measured than in earlier cycles. The average IPO size has moderated to ₹1,651 crore this year from ₹1,835 crore in 2024, indicating a tilt towards mid- and small-sized deals. More importantly, subscription metrics have also softened meaningfully: average oversubscription has fallen to 36.46x in 2025 from 51.23x in 2024, which YES Securities said “highlights investor selectivity amid a heavier supply of deals.”

Quality over hype

Valuation discipline is visible in the pricing data, according to the brokerage. Median IPO price-to-earnings (P/E) has corrected to 33.5 times in 2025, down from 42.9 times a year ago. YES Securities calls this "more reasonable valuations," adding that the recalibration "suggests a healthier balance between issuer aspirations and investor expectations."

 

At the same time, the share of loss-making companies coming to market has fallen to 8.6 per cent, from double-digit levels in earlier years. The brokerage believes this "reflects improved listing discipline and more mature deal curation," with the market rewarding fundamentally stronger, profit-generating businesses over purely narrative-driven offerings.

Domestic money is setting a tone

A key pillar of this more mature market is steady domestic institutional support, especially from mutual funds. According to YES Securities, the share of IPO anchor allocations to mutual funds has remained steady at 42–44 per cent of the anchor investor category since CY2023.

 

"This sustained mutual funds appetite acts as a strong stabilising force, absorbing supply and validating valuations in a market witnessing elevated deal activity," the brokerage said. 

 

With domestic institutions now anchoring a large chunk of anchor books, local money is increasingly setting the standard on price and quality, rather than momentum from short-term foreign flows.

 

Overall, the IPO ecosystem remains healthy, supported by strong domestic institutional flows and improved operational efficiency. Sustained market quality, however, will depend on increasing fresh capital issuance and maintaining realistic pricing discipline, YES Securities said.