Dalal Street is in the middle of an IPO carnival. In just a few weeks, investors have witnessed a parade of public issues—from household names like Tata Capital and LG Electronics India to a stream of ambitious consumer-tech and SME hopefuls.
Subscription windows are filling within hours, grey market premiums are flashing across WhatsApp groups, and brokers are calling it the most frenetic primary market in years. But beneath the neon optimism, a quieter question hums: Is this frenzy a reflection of fundamentals, or just another liquidity high?
IPO RUSH BACK ON DALAL STREET
The surge in IPOs this season isn’t accidental. After a volatile start to 2025, the mood on the Street has turned decidedly upbeat, helped by the Reserve Bank’s dovish tone, stable foreign inflows, and record-breaking SIP contributions from retail investors. Promoters, sensing a rare alignment of sentiment and liquidity, are rushing to list before the window narrows again.
“The surge in IPO activity—particularly with marquee names like Tata Capital, LG India, and several mid-market consumer and tech firms—stems from a mix of market liquidity, policy clarity, and timing advantages,” said Narinder Wadhwa, Managing Director & CEO of SKI Capital Services Ltd.
“After a volatile first three quarters of 2025, sentiment has turned constructive with the RBI’s rate cuts and stance, stable domestic inflows via record SIPs, and supportive valuations in secondary markets. Promoters view this window as an ideal opportunity to capitalise on high investor appetite for quality names before further monetary tightening or global uncertainty resumes,” Wadhwa added.
Wadhwa highlighted that the rush also reflects Sebi’s streamlined approval timelines and the growing retail participation momentum. “For larger issues like Tata Capital and LG India, the rush also reflects a desire to unlock value from diversified conglomerates while the market still rewards strong balance sheets and brand visibility.”
TRACKING IPO RETURNS IN 2025
But while the primary market seems to be dancing to a familiar tune, the afterparty has been less euphoric. Of the nearly 70 issues floated till September, only about half have delivered positive returns. Several SME listings have slipped below issue price, while a handful of marquee names have held their gains. “It’s a selective opportunity—neither an all-in nor an avoid phase,” said Wadhwa.
“While 2025 has seen record IPO volumes, performance has been uneven. Nearly a dozen IPOs have delivered only single-digit gains, indicating that listing momentum has cooled. Thus, for retail investors, this is not a broad IPO boom to chase blindly. It’s a stock-picker’s market, where focus should be on business quality, cash flow visibility, and reasonable valuations,” he added.
That theme of caution extends to how investors approach upcoming issues. Wadhwa said retail investors must adopt a disciplined selection framework. “Focus on fundamentals like revenue visibility, consistent profit growth, and debt levels,” he said.
“Compare valuation multiples to listed peers and avoid IPOs that price in ‘future perfection’. Back issues with credible promoters or strong anchor investors—these are signals of quality. Also, prefer capital-raising for growth or deleveraging over pure OFS exits. In the current environment, large, fundamentally strong mainboard IPOs deserve more attention, while small, aggressively priced SME issues warrant caution, especially since over 30 SME listings in 2025 are now below issue price.”
Valuation remains the biggest flashpoint in this new IPO wave. “Valuations are undeniably rich—many new issues are demanding 25–40x earnings multiples, often above established peers,” said Wadhwa.
Wadhwa said this reflects a liquidity-driven premium, not always justified by fundamentals, but added that India’s macro and structural growth story—robust domestic demand, rising financial inclusion, government focus on manufacturing and infrastructure—still offers long-term support.
“In select cases like consumer finance, renewables, and premium manufacturing, high valuations can be sustained if earnings growth continues. But investors must differentiate between high valuation with visibility and high valuation with hope. With muted listings for nearly half of 2025 IPOs, chasing momentum can backfire. Long-term compounding, not listing gains, should be the goal.”
That last line might well define the IPO year of 2025. The rush is real, but so is the risk. As investors scramble for allocations and social media buzzes with GMP chatter, it’s easy to mistake liquidity for conviction.
The smarter play, perhaps, is to look past the carnival lights. Because when the music slows, only the strongest balance sheets—and the most disciplined investors—will still be dancing.
