Indian IPO Market Faces a Sharp Decline in 2025
India’s primary market, once brimming with high-profile IPOs, has entered a phase of significant slowdown in early 2025. According to Sarthak Misra, Partner at SoftBank, this dip in IPO activity is part of the natural market cycle, and investors should expect a rebound in the coming quarters.
With just 10 IPOs filed on the BSE mainboard so far in 2025, compared to 90 in 2024, the decline has raised concerns among market participants. However, Misra believes that historical trends indicate this is a temporary phase rather than a fundamental market weakness.
IPO Market Faces Major Slowdown: Statistics
The current slowdown is evident from the drastic reduction in IPO filings:
- 2025: Only 10 IPOs filed on the BSE mainboard so far.
- 2024: 90 IPOs, marking a peak in primary market activity.
- 2023: 59 IPOs, showing a steady but lower volume.
- 2022: 38 IPOs, reflecting a pre-boom stabilization phase.
The cooling of the IPO market reflects a combination of valuation concerns, shifting investor sentiment, and tighter liquidity conditions.
Market Cycles: Learning from the Past
Misra compared the current IPO slump to what happened after Facebook’s IPO in 2012:
- Facebook’s stock initially lost half its value after its public debut.
- Tech IPOs like Groupon and Zynga struggled despite multi-billion-dollar valuations.
- The IPO market came to a standstill for a while, only to recover strongly later.
“I wouldn’t be surprised if we see something similar now—and that’s completely fine,” Misra said, suggesting that market cycles are inevitable and should not be viewed as a sign of long-term weakness. “Source : Moneycontrol”
Why IPO Activity Has Declined in 2025
The slowdown in IPOs can be attributed to several key factors affecting the broader financial market:
1. Valuation Concerns
- Many tech and startup IPOs in recent years were overvalued.
- Investors are now more cautious and demanding sustainable profitability before committing capital.
2. Liquidity Constraints and Interest Rate Impact
- The global tightening cycle of central banks, including the US Federal Reserve and RBI, has made capital more expensive.
- Institutional investors prefer safer assets in uncertain times, delaying their participation in new IPOs.
3. Stock Market Volatility
- The broader market downturn has made companies hesitant to go public.
- Investors are focusing on stable, profitable businesses, reducing demand for speculative IPOs.
Long-Term Outlook: Optimism Despite the Slowdown
Despite the current dip, Misra remains optimistic about the long-term outlook for the Indian IPO market:
- Historically, IPO slowdowns have always been followed by a strong revival.
- Investors who take a long-term perspective on IPOs have generally benefited from sustained growth.
- India’s economic fundamentals remain strong, making a recovery likely.
“If you had invested in a basket of companies back then, you would likely be pleased with where they are today,” Misra said, urging investors to focus on the bigger picture.
Which Sectors Will Lead the Next IPO Boom?
Misra predicts that the next wave of IPOs will be dominated by consumer tech and financial services companies:
- Consumer tech firms will continue to see strong demand from investors.
- Stockbroking firms and fintech startups are also likely to list soon.
- The SaaS (Software as a Service) sector and AI-driven businesses could play a major role in the next phase of IPOs.
IPO Market Poised for a Future Comeback
While IPO activity in 2025 has slowed significantly, SoftBank’s Sarthak Misra believes this is a natural market cycle and not a structural decline.
Investors should remain patient, as history suggests that IPO markets tend to bounce back once market conditions stabilize. With consumer tech, fintech, and SaaS sectors expected to drive future public listings, the Indian IPO market may be gearing up for a resurgence in the next few quarters.
