IPO Insights
Between April and June 2025, India’s capital markets navigated a dynamic macroeconomic landscape, markedly different from the first quarter (Jan–Mar 2025). Global macroeconomic events, geopolitical tensions, policy changes, and their interplay with India’s domestic fundamentals orchestrated the performance of the quarter. Below, we analyze the key global and Indian macro trends that shaped market outcomes in Q2 2025 and compare them with Q1, highlighting pivotal events such as the Iran–Israel conflict, a U.S. tariff pause extension, India’s anti-terror military response, foreign investment flows, and GDP outlooks.
Global Macro Environment: Q2 2025 Upswing Amid Geopolitical Jitters
Easing Trade War Tensions (versus Q1 uncertainties)
A major overhang in Q1 2025 was escalating global trade tensions, which resulted in worldwide sell-offs and kept investors cautious. By early Q2, there was a temporary respite due to the U.S. administration’s announcement of a 90-day pause on new tariffs in April to negotiate trade deals, averting an immediate escalation. A breakthrough was achieved by mid-May when the US and China reached an interim agreement to slash reciprocal tariffs. This easing of trade tensions fueled a relief rally in global equities, markedly more optimistic than the uncertainty-dominated tone of Jan–Mar.
Oil Shock and Middle East Conflict
An unforeseen event in Q2 was the brief Iran-Israel war in June 2025. For oil-importing countries like India, this was a concerning development that threatened to stoke inflation and hurt trade balances. However, the conflict remained limited in duration, resulting in a muted market fallout.
Global Monetary Climate
Another subtle shift from Q1 to Q2 was the turn in global monetary policy bias. By mid-2025, inflation had begun easing in many economies, allowing central banks to pause or even consider rate cuts. (In the U.S., the Federal Reserve primarily held rates steady through Q2, after aggressive tightening in 2024 – a pause that boosted sentiment for emerging markets.). This contrasted with early 2025, when markets were still uncertain if global rates had peaked.
In summary, Q2’s global macro setting featured reduced trade frictions, a quick recovery from geopolitical scares, and more accommodative financial conditions – a more benign environment than the cautious first quarter.
Indian Macroeconomic Trends: Strong Fundamentals and Policy Shifts
India’s macroeconomic fundamentals remained resilient, supported by steady domestic demand, healthy capital investment, and controlled inflation. IMF continues to project India’s GDP growth above 6% for both 2025 and 2026, making the country one of the fastest-growing major economies globally. This was a tad lower than previous forecasts (the IMF did trim 2025 growth down from a January estimate, citing “heightened global trade tensions” as a risk). Even so, India’s outlook remained remarkably stable and far above global averages.
Inflation Collapse and Monetary Easing
A standout domestic development in Q2 was the dramatic decline in inflation, which starkly contrasted with the sticky inflation of 2024. By June 2025, India’s CPI inflation fell to 2.1%, its lowest level over six years and well below the Reserve Bank of India (RBI)’s 4% target midpoint for the fifth month. In a pro-growth move, the central bank announced a 50-basis point repo rate cut on June 6, a much larger-than-expected cut that brought the policy rate down to 5.5%.
Foreign Institutional Investors (FII) and Liquidity
Improvements in foreign investor inflow during the Apr-Jan quarter were noteworthy compared to Jan-Mar ’25. During Jan–Mar 2025 and the latter part of 2024, FII were net sellers of Indian equities, partly owing to global risk aversion and valuation concerns. While Q1 ended on an almost negative FII trend, Q2 saw a sharp turnaround, making FII net buyers in the market.
Domestic institutions (DII) maintained steady buying activity, providing crucial market stability and demonstrating continued confidence in Indian equity markets. The sustained DII participation during Q2 2024 reflects robust domestic liquidity conditions and institutional appetite for equity investments, factors that directly benefit new public offerings seeking market reception.
Global and Indian Equity Market
Improved U.S.-EU trade talks and a pause in tariff hikes eased global slowdown fears, triggering a broad rally in risk assets. Developed markets gained strongly, with the MSCI World Index up 10.7% in June on a Q-o-Q basis, led by U.S. equities.
India equity markets also rallied, though at a slower pace than developed markets. The Nifty 50 Index gained 8.49% in Jun’25 on a Q-o-Q basis compared to Mar’25 and 3.1% on a M-o-M basis (YTD +6.95%).
Listing on Main-Board
After a quiet April (no mainboard listings), IPO activity picked up in May and June of 2025. Three mainboard IPOs debuted in May, raising INR 5,276 crore. June saw six more large listings. This quarter recorded 9 mainboard IPOs raising INR 13,851 crore (versus INR 15,984 crore in Q1’25).
The average issue size and the number of IPOs remained largely the same over both quarters. The second quarter saw a clear shift towards primary issuances, which accounted for 87% of total IPO proceeds. This was in contrast to the first quarter of 2025, when Offer for Sale (OFS) dominated, contributing 89% of the proceeds.
The Automobile and Auto Components sector led capital raising in the second quarter of 2025, mobilizing a total of INR 5,131 crores. This included a direct consumer-facing player, Ather, and an OEM supplier, Belrise Industries. The Consumer Services and Oil, Gas & Consumable Fuels sectors also saw significant activity, with The Leela Hotels and Aegis Vopak Terminals raising INR 3,500 crores and INR 2,800 crores respectively. Capital goods industry continues to see the highest number of listings, as in the previous quarter (CQ: 3 listings vs PQ: 5 listings), collectively raising INR 1,775 crore.
Listing in Pipeline with SEBI
SEBI has received approximately 160 draft offer documents, which collectively represent a proposed issue size of over INR 1.61 lakh crores (approximately USD 19 billion).
India’s IPO pipeline continues to build strong momentum, with the top 10 industries collectively gearing up to unlock approximately INR 1.05 lakh crore (USD 12 billion) in potential public market value.
Banking & Finance Leads the Charge
With an estimated issue size of INR 50,394 crore across 14 issuers, the Banking & Finance sector alone contributes 25%–30% of the total expected capital raise. This significant lead underscores the sector’s robust financial appetite and investor interest, particularly in the NBFC and lending sub-segments. Prominent names such as Tata Capital, HDB Financial, and Credila Finance spearhead this trend, marking some of the largest anticipated offerings in this category.
Solar & Engineering – Rising Stars
The Solar sector, with a projected issue size of INR 11,871 crore, reflects the increasing investor focus on clean and renewable energy. Its strong position signals government policy support and ESG-driven capital flows.
With the highest number of issuers (16) and a total issue size of INR 10,645 crore, engineering highlights a broad base of industrial and manufacturing players tapping into capital markets to fund expansion and modernization.
Technology & Healthcare Make Strategic Moves
The IT sector (INR 6,534 crore) and Pharmaceuticals (INR 5,775 crore) continue to show steady IPO interest, reflecting global outsourcing strength and healthcare demand post-COVID. While not the largest in terms of capital, these sectors remain strategic from a growth and valuation standpoint.
Real Estate, EdTech & Others
Real Estate (INR 4,890 crore) reflects a rebound in demand and investor confidence in property and construction-linked plays. Education (EdTech), despite having only 2 issuers, commands an issue size of INR 4,850 crore, led by Physics Wallah. Electric Equipment (INR 4,493 crore) rounds out the top 10, hinting at infrastructure-linked manufacturing and supply chain modernization activity.
In addition, a new wave of digital-first and tech-driven companies is entering the IPO market. Companies such as Pine Labs (Finance) and Meesho (E-Commerce) have filed their DRHPs after successfully completing complex reverse flip processes, underscoring the growing maturity of India’s capital markets.
IPO Returns
Of the nine IPOs launched in Q2 2025, nearly 80% closed their debut trading day with positive listing gains, delivering an average premium of 3.1%. While this marks a moderation from the surge seen in early 2025, it signals a constructive and stabilised market environment—favourable for both issuers and long-term investors.
Five companies posted modest gains in the 0–10% range, while two each saw sharp movements either significantly above or below their issue prices. This mixed, yet largely optimistic performance reflects both the continuing investor appetite and the growing emphasis on realistic pricing strategies. For prospective issuers, the quarter’s trends highlight the importance of balanced valuations and market timing to unlock successful listings.
Investor Participation
The subscription levels have improved across all investor categories after sharp fall in February 2025.
Qualified Institutional Buyers (QIB): QIB subscription rates spiked in May after hitting a low point in February, driven by strong interest in Belrise Industries INR 2,150 crore issue, which saw the QIB portion bid up about 112x, while smaller Borana Weaves saw QIB bids of 87x. Strong anchor orders and positive market sentiment fueled the rally in both cases. By contrast, June 2025 saw a notable pullback in QIB appetite. With fewer blockbuster offerings and some market caution, QIB subscription across most June IPOs was more moderate (often single-digit or modestly oversubscribed) compared to May’s frenzy.
Non-institutional Institutional and Retail Investors (NII): The combined response from Non-Institutional Investors (NIIs) and Retail Investors (RIIs) followed a similarly buoyant path in May 2025, underpinned by the exceptional demand for IPOs such as Borana Weaves, where public category subscriptions reached staggering levels. The average subscription by NIIs stood at 93 times and by Retail at 69 times in May, reflecting widespread investor enthusiasm across public segments. Factors such as smaller issue sizes and substantial grey market premiums contributed to this sharp uptick. However, June 2025 marked a significant moderation, with NII subscription averages falling to 63 times and Retail to just 12 times. This cooling-off phase was driven by fewer marquee IPOs and a more cautious approach amid mixed secondary market performance. Retail investors, in particular, showed a sharper pullback, suggesting increasing selectiveness and risk aversion among individual participants.
Overall subscription: In May, the average subscription surged to 64 times, reflecting heightened investor appetite across all categories. A combination of smaller issue sizes, strong listing gains, and bullish market sentiment largely fueled this spike. However, the enthusiasm tapered off significantly in June, with average total subscriptions falling to 32 times, nearly half the previous month. The decline points to a more cautious market environment, with investors becoming selective amid concerns over valuation stretch and the absence of high-profile IPOs that could command widespread demand. The volatility in overall subscription underscores the market’s sensitivity to both macroeconomic cues and the specific quality of IPO offerings.
Closer Look: Use of Proceeds
Proposed use of proceeds (April to June 2025)
Issuers continue to focus on bolstering their balance sheets, directing 57% of IPO proceeds to debt repayment. This marks a significant increase compared to the 27% share seen in Q1 2025. Capital expenditure and general corporate purposes absorb 18% and 11% of proceeds, respectively, underscoring commitments to growth projects and operational resilience. The automobile and auto‑components sector drives a 7% allocation to R&D, while marketing and working‑capital needs account for just 3% and 4% of the funds raised.
Key uses of proceeds:
- Notably, debt reduction was the largest single bucket. Five issuers (Schloss Bangalore, Belrise, Aegis Vopak Terminals, Oswal Pumps, and Scoda Tubes) allocated between 65 % and 97 % of their proceeds to repay or prepay borrowings. Several others (e.g., Prostarm Info and ArisInfra) earmarked smaller slices (11–43 %) for the same purpose.
- Capex accounted for 20–55 % in six IPOs. Ather Energy, Borana Weaves, Scoda Tubes, Aegis Vopak Terminals, Oswal Pumps, and Prostar Info are all funding new factories, production capacity expansions, or LPG terminal development.
- Working capital requirements drove allocations of 20–65 % at Borana, Scoda, and ArisInfra, reflecting the need to support day‑to‑day operations and inventory build‑up.
- Strategic inorganic growth (acquisitions) featured in Prostarm’s plan (32 %), while general corporate purposes (GCP) formed a minor carve‑out (0–8 %) for most issuers. R&D and marketing consumed small portions at Ather Energy (30 % and 12 %, respectively).
These listings reveal two primary corporate strategies, offering investors a mix of growth-oriented opportunities and financially conservative plays focused on risk reduction. Growth-focused companies like Ather Energy are raising capital for future expansion (Capex/R&D). In contrast, established players like Schloss Bangalore and Aegis Vopak prioritize balance sheet strength by allocating the majority of proceeds to debt repayment.
Knowledge Corner
SEBI Board Meeting June 2025
The Securities and Exchange Board of India (SEBI) held its landmark 210th board meeting on June 18, 2025, approving transformative regulatory reforms that significantly impact the IPO landscape and capital markets ecosystem. These amendments represent SEBI’s commitment to modernizing India’s securities market architecture while enhancing investor protection and operational efficiency.
