The domestic initial public offering (IPO) market is experiencing a significant surge, fuelled by the financialisation of savings, digital ease of investing, and expanding participation from both retail and institutional investors, investment bankers said on Wednesday.
The depth of the domestic capital pool has reduced India’s reliance on foreign institutional investors, enhancing market stability, a sentiment echoed by most panellists during a discussion moderated by Samie Modak of Business Standard.
Sonia Dasgupta, managing director (MD) & chief executive officer (CEO) of investment banking at JM Financial, noted that liquidity generated from post-pandemic financialisation of savings, coupled with repricing in the secondary market, deepened the domestic equity capital markets.
Gesu Kaushal, MD & co-head of equity corporate finance at Kotak Mahindra Capital Company, said the broader adoption of digital payment methods like UPI for IPO applications has democratised participation, expanding capital sourcing from regions like Bihar and UP.
Market infrastructure improvements, such as shortened IPO listing timelines and streamlined processes, are also boosting market buoyancy.
In 2024, IPOs mobilised a record Rs 1.6 trillion, and this year’s IPO mobilisation is on track to surpass Rs 1.3 trillion, setting the stage to break last year’s record.
Sunil Khaitan, MD & head of financing at Goldman Sachs India, said domestic mutual funds and institutional investors became crucial providers of intellectual and financial capital by understanding and supporting innovative business models previously uncommon in the domestic market.
Last year, Hyundai Motor India’s IPO raised a record Rs 27,859 crore while earlier this month, LG Electronics India’s Rs 11,607 crore IPO garnered record bids totalling Rs 4.4 trillion.
Amitabh Malhotra, vice chairman of capital markets and advisory at HSBC India, observed that MNC subsidiaries are increasingly choosing India as a standalone, mature capital market for listings.
“Previously, MNCs listed only in global hubs and overlooked their Indian arms for public offerings.
"This has changed due to regulatory reforms, a large domestic investor base, and the maturity of Indian capital markets, which now better absorb shocks and provide stability,” he said.
Khaitan elaborated: “Indian subsidiaries of MNCs often command significantly higher valuation multiples than their global parents.
"This ‘MNC premium’ is driven by India’s faster economic growth, stronger investor confidence, and a more dynamic market environment compared to the slower, saturated markets of the parent companies.”
Kaushal underscored a notable shift in company mindset toward going public.
“Many family-owned businesses, traditionally wary of IPOs, now view public listings as a key growth opportunity, largely due to leadership transitions to the second generation who are more open to professionalising operations and engaging with retail investors for the long term,” she said.
Driving the IPO boom is robust participation from domestic institutional investors, especially mutual funds, with Rs 3-4 trillion of household flows channelled annually into equities.
Dasgupta highlighted, “Strong domestic participation is enhancing price discovery, establishing valuation benchmarks, and reducing market volatility.”
Malhotra added: “The surge in domestic institutional involvement has brought a better balance among issuers, bankers, and investors, leading to more pragmatic IPO pricing.”
On post-listing performance, bankers noted positive trends.
“Most companies going public in 2025 are backed by non-permanent capital such as venture capital and private equity rather than traditional family or MNC ownership.
"These investors, aiming for exits within 3-5 years, have a vested interest in ensuring strong post-listing performance to maximise returns,” said Khaitan.
Bankers also emphasised an ever-growing domestic investor base that is becoming increasingly discerning, prioritising sustainable business fundamentals.
© 2025