Moneycontrol Pro Panorama | Capital craze

Indian investors, discouraged by muted performance in listed equities, are turning to fresh opportunities in IPOs.

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The Indian stock market is telling two very different stories in 2025. On one hand, the secondary market is struggling to stay positive, weighed down by global uncertainties and tepid corporate growth. On the other hand, the primary market is rewriting history, with initial public offerings (IPOs) drawing unprecedented interest from investors.

According to a Moneycontrol report, IPO fundraising is poised to breach the ₹1 lakh crore milestone for only the third time in history, with three months still left in the calendar year. Indian corporates have already mobilised ₹85,000 crore through 74 IPOs in 2025. The only other occasions when this landmark was crossed were in 2021, when 63 IPOs raised ₹1.19 lakh crore, and in 2024, when 91 IPOs raised a record ₹1.6 lakh crore.

The pipeline for the remainder of the year is equally robust. Tata Capital’s ₹16,000 crore issue and WeWork India Management’s ₹3,000 crore IPO will together push the tally past the ₹1 lakh crore mark. LG India is also preparing for a ₹15,000 crore offering in October, setting the stage for total collections to surpass ₹1.3 lakh crore — making 2025 the second-best year ever for IPO fundraising. Other high-profile names waiting in the wings include ICICI Prudential, Groww, Pine Labs, Canara HSBC Life, Credila Financial, and PhysicsWallah.

The frenzy is not limited to the main board. The SME segment is seeing record-breaking participation. September alone witnessed 53 SME IPOs raising ₹2,309 crore — the highest ever in a single month by both volume and value. So far in 2025, 207 SME listings have mobilised ₹9,129 crore, already setting a new annual record with an entire quarter still to go.

But what explains this surge in the primary market amid a sluggish secondary market?

The answer lies in shifting investor psychology and capital flows. Indian investors, discouraged by muted performance in listed equities, are turning to fresh opportunities in IPOs. Foreign investors, too, have mirrored this trend. A CNBC report highlighted that overseas funds invested a net $14.5 billion in India’s primary market last year while redeeming $14.4 billion from the secondary market. In 2025, they have so far sold stocks worth $20.7 billion in the secondary market but channelled $4.8 billion into IPOs.

Interestingly, this enthusiasm persists despite diminishing listing gains. The average first-day returns for IPOs in 2025 have slipped to 13.42%, compared with 30.12% in 2024, when 71 out of 90 IPOs delivered positive debuts. The decline is even sharper in the SME space, where listing gains have fallen to 13.68% in 2025 from a staggering 60.25% in 2024 and 36.68% in 2023 — a trend that mirrors the subdued tone of the broader market.

The divergence between India’s primary and secondary markets underscores a fascinating paradox. Investors appear disenchanted with existing companies, but eager to bet on new ones. For corporates, this is a golden window to raise capital, but for investors, the shrinking listing gains suggest that exuberance may be running ahead of fundamentals. The sustainability of this boom will depend on how these freshly listed companies perform once the initial buzz fades. For now, India’s IPO market is enjoying its moment in the sun, but the real test lies in whether these offerings can deliver long-term value beyond the first-day pop.

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