India’s IPO Market Braces For A Valuation Reality Check After Blockbuster Run In 2025

After two consecutive record-breaking years, India’s IPO market is entering 2026 with cautious optimism rather than outright exuberance. While 2025 saw a visible softening in listing gains and subscription intensity, market experts say demand for new listings remains intact — provided valuations stay grounded and market conditions cooperate.

"2025 was a blockbuster year, and for the first time in India’s IPO history we saw two back-to-back all-time highs," said Pranav Haldea, the managing director of PRIME Database Group. "Historically, you would see a peak year followed by a lull. This cycle has clearly been different."

Haldea pointed out that the surge in IPO activity has been largely funded by retail participation, both directly and via mutual funds. However, signs of fatigue emerged last year. Average listing gains dropped sharply — from around 30% in 2024 to nearly 10% in 2025 — and oversubscription levels moderated.

"Retail investors largely come for listing pops, and that enthusiasm did taper in 2025," Haldea said. Still, he stressed that demand for fresh equity remains strong as mutual funds continue to receive steady inflows. "There is only so much they can deploy in the secondary market, especially when valuations are stretched. Fresh paper is still required."

According to Haldea, the pipeline for 2026 remains robust, but its success will hinge on sensible pricing and secondary market support. "If valuations are kept in check, 2026 could well turn out to be another strong year."

Echoing that sentiment, Deven Choksey, the managing director of DRChoksey Investment Managers, said the market has already begun correcting excesses seen last year. "The second half of 2025 itself brought a reality check. Many companies that priced IPOs aggressively are now trading below issue price," he said.

Choksey believes 2026 will be a year of execution rather than excess. With several large-cap stocks trading at relatively reasonable valuations, he expects mutual fund flows to be split more evenly between primary and secondary markets.

"Quality companies coming to the market are likely to price themselves more realistically this time," he said, adding that upcoming large IPOs could draw meaningful investor interest if valuations are disciplined. On whether heavy IPO issuance could weigh on secondary markets, Choksey pushed back. "Domestic investors have consistently supported equities. It was foreign selling that pressured markets in 2025," he said.

With foreign flows expected to stabilise and SIP inflows remaining strong, he sees 2026 offering a more balanced allocation between new listings and existing stocks.