Indian IPO market soared to new heights in 2024: Will the momentum sustain in 2025?

IPO Market Outlook: The year 2024 marked a defining moment for the Indian IPO market, as over 90 companies collectively raised an impressive ₹1.62 lakh crore, two times more than ₹49,436 crore raised in 2023. This staggering achievement was headlined by Hyundai Motors India's ₹27,870 crore IPO, which not only eclipsed all other IPOs of the year but also claimed the title of the largest IPO in India’s history, surpassing LIC's ₹20,557 crore IPO in 2022.

As the calendar turns to 2025, attention shifts to a pipeline of marquee IPOs. Big names like LG India (valued at $15 billion), Flipkart ($36 billion), and Reliance Jio (valued at over $100 billion) are preparing to enter the primary markets. But the critical question remains: Will India’s IPO market sustain its momentum in 2025?

The SME IPO Market: A Double-Edged Sword

The SME IPO segment in 2024 was a microcosm of both boundless enthusiasm and stark realities. Record-breaking capital inflows underscored the segment’s popularity, while sharp regulatory scrutiny and governance issues highlighted its vulnerabilities. While small and medium enterprises raised unprecedented amounts, concerns over frothy valuations, corporate governance lapses, and stock price manipulation brought the segment under the scanner.

Reflecting on these trends, Trivesh D, COO of Tradejini, commented: “SEBI’s stricter regulations are aimed at strengthening SME IPOs by filtering out weaker players, creating a more reliable market. The SME IPO Index soared 143 per cent in 2024, outpacing the Mainboard’s 33 per cent rally. However, with average returns at 105 per cent, sustainability is a concern. I feel SME IPOs are currently in a bubble, with investors still jumping in without proper due diligence. A correction is likely in 2025, as 2024’s hype may not be sustainable. It is better to focus on strong Mainboard IPOs and carefully select SME IPOs with solid promoters and good financials.”

Resilience in the Mainboard IPO Market

Analysts believe the resilience of the broader IPO market is intact with the momentum witnessed in 2024 expected to extend into 2025. 

Narendra Solanki, Head of Fundamental Research - Investment Services at Anand Rathi Shares and Stock Brokers, expressed optimism for 2025, saying, “The IPO market will continue to exhibit vibrancy and resilience in 2025, maintaining its momentum from 2024. We may witness a significant number of issuances this year, closely mirroring the robust activity seen in the previous year. In 2024, IPOs worth approximately ₹1.35 lakh crore have already been launched, showcasing the strength of the market. Looking ahead, 2025 has the potential to comfortably achieve ₹1 lakh crore in IPO issuances, with major offerings anticipated from prominent companies such as Tata Capital, LG, Jio, and NSE, among others.”

Several factors underpin this positive outlook. Continued optimism in the equity markets, growing investor awareness, and healthy liquidity conditions have bolstered confidence in the primary market. Additionally, a strong risk appetite for wealth creation and favourable domestic economic conditions provide a solid foundation for sustained demand. 

The Role of the Secondary Market

The relationship between the primary and secondary markets adds another layer of complexity. Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, highlighted the interplay, saying “The primary market pipeline is directly related to the subdued secondary market. Till the time secondary market remains subdued, liquidity from this segment will flow into the primary market as more and more paper is being floated."

Sheth also pointed out that the buoyancy in the primary market is expected to persist as long as listing gains remain attractive. “If there’s any major crash in the secondary market and listing gains vanish, the primary market may lose its appeal to investors,” Sheth cautioned.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.