India’s red-hot IPO market, minting $200 million an hour, mirrors China’s rise

Six-and-a-half hours. That’s all it took for LG Electronics India Ltd.’s $1.3 billion initial public offering to be fully sold on Oct. 7, marking the fastest take-up in 17 years among major Indian IPOs.

It’s offerings like LG’s, the nation’s third biggest for this year, that have made India one of the world’s hottest IPO venues, with total proceeds hurtling toward last year’s record tally of $21 billion.

Yet the current listings wave isn’t just about volumes. It’s also about who’s buying these new stocks.

A rapidly expanding pool of money from domestic mutual funds, insurers and millions of retail investors is now dominating the IPO space, showing an increased ability to absorb large share sales. That’s reducing the reliance of India’s equity capital market on foreign funds, spurring a structural shift that some bankers and long-term observers say will help create a self-sustaining IPO market.

The euphoria comes with risks, though. Excessive valuations for some companies and over-subscription rates surpassing 100 times for many tiny IPOs have spurred concern about potential corrections that could harm mom-and-pop buyers.

In all, local investors have piled in ₹97,900 crore into IPOs since the start of 2024, versus ₹79,000 crore invested by foreign funds, according to Prime Database, a capital markets data provider. Rising steadily over the years, the share of domestic investments in initial share sales stands at almost 75% for 2025 — the highest for any year in which proceeds exceeded ₹1 lakh crore ($11.3 billion), the data show.

“The market is going through a sea change,” said Abhinav Bharti, head of India equity capital markets at JPMorgan Chase & Co. “Households are deploying more and more of their savings into equities through mutual funds and that capital is getting channeled into capital markets.”

Barring any shocks, this pool of money could serve as a bedrock of demand for years to come, he added.

Home appliances maker LG’s IPO was sold at the rate of $200 million an hour. Local investors — institutions and individuals combined — made up 60% of the total bids received during the three-day subscription period, excluding the anchor book. The stock surged 48% on debut.

Among all Indian IPOs that have raised at least ₹10,000 crore, LG’s take-up was the fastest since Reliance Power Ltd. in January 2008 sold out its offering — the nation’s biggest back then — in less than a minute.

Roadshow Everyday

The power shift taking hold in India’s IPO space is similar to the one its $5.3 trillion stock market has experienced in recent years, thanks to an unprecedented retail investing boom brought about by the pandemic.

The spread of mobile trading apps, the ease of opening an account and the proliferation of how-to-invest content on social media has created millions of first-time equity investors. Those more risk-averse are using monthly recurring plans to pile billions of dollars into local mutual funds to gain exposure to a market where the benchmark stock index is on course for a 10th straight annual advance.

As a result, domestic institutional investors’ ownership in more than 2,000 companies listed on the National Stock Exchange of India Ltd. has risen for five straight quarters to 19.2% as of June, the highest level in 25 years, according to data from the bourse. Holdings of foreign portfolio investors have dropped to 17.3%, the lowest in more than a decade.

New listings appear to be a more rewarding bet for investors as Indian IPOs have generated a weighted average return of 18% this year, beating the 9.7% advance in the NSE Nifty 50 Index. What’s notable is that the benchmark’s gain has come despite foreign outflows of about $16 billion from the market, which are set to be the second biggest on record. That’s because domestic investors, mainly mutual funds and insurance firms, have piled in over $70 billion.

For prospective issuers, the voracious appetite from local investors has made the equity market a preferred venue to raise funds as they look to capitalize on business opportunities in the world’s fastest-growing major economy.

“Everyday there is a roadshow,” said Vivek Toshniwal, chief executive officer of Mumbai-based family office Plutus Wealth Management LLP, which invests in IPOs. “A euphoria like this is unprecedented.”

Some local bankers are working 15-hour days and even skipping vacations as the pipeline remains robust. Data from Prime Database shows that 80 firms have received the securities regulator’s approval for IPOs while another 121 have their applications filed with it.

Wireless carrier Reliance Jio Infocomm Ltd., National Stock Exchange of India Ltd. and Walmart-backed e-commerce firm Flipkart India Pvt. are among the closely watched billion-dollar-plus offerings expected in the next year or two. Some other large ones include Walmart-backed PhonePe Ltd., Hindustan Coca-Cola Beverages Pvt., SBI Funds Management Ltd., Manipal Hospitals Pvt. and Brookfield-backed Avaada Electro Pvt.

That’s after more than 300 listings have already raised almost $16 billion so far in 2025, making India the world’s fourth-busiest IPO venue globally, according to data compiled by Bloomberg. In Asia, only Hong Kong and mainland China have seen more proceeds than India.

Pratik Loonker, head of equity capital markets at Axis Capital Ltd., says the past couple years have been the busiest he has seen in a career spanning more than two decades.

“It’s a virtuous cycle” with mutual funds’ participation, said Loonker. “They make alpha, which means they make reasonable returns for individual shareholders who are contributors to these mutual funds. And if that happens, more and more individuals come to the market to give money to these asset managers to manage, which means they have more capital to deploy again.”

Alpha refers to the gains above market benchmarks.

‘Spoil the Party’

October itself has been a landmark month for India. LG’s IPO took orders around the same time as shadow lender Tata Capital Ltd.’s IPO raised $1.7 billion in this year’s biggest listing. SoftBank Group Corp.-backed eyewear retailer Lenskart Solutions Ltd. — one of many Indian startups that received record funding from private funds in the past decade — will at the end of the month start taking orders for its $828 million IPO.

Such a diverse group of issuers is another notable feature of the latest IPO rush when compared with the 2021 boom, which was dominated by tech startups such as food delivery firm Eternal Ltd. (then Zomato), digital payments provider Paytm’s owner One 97 Communications Ltd. and FSN E-Commerce Ventures Pvt, which owns beauty product e-retailer Nykaa.

While those deals also witnessed initial euphoria, concerns over valuations and global rate hikes led to a sharp correction in their shares later. Only Eternal’s shares have managed to climb back above their IPO price.

That is a potential risk even now, according to Loonker of Axis Capital. Pricing IPOs at the wrong valuations could dampen an otherwise resilient market, he said.

“If five or six large IPOs have poor listings, that can quickly spoil the party,” he said.

While Indian IPOs have collectively generated a pop this year, nearly half of the listings across the nation’s main and junior boards are under water, data compiled by Bloomberg show. Companies that raised less than $100 million dominate the list of laggards, though a few big ones like shadow lender HDB Financial Services Ltd., whose $1.5 billion listing was this year’s second biggest, are also in the red.

And while volumes have risen, the performance of IPOs on the main board shows that the ability to generate quick returns is fading. The median return for stocks one month after listing has shrunk to 2.9% this year, down from 22% last year, according to a Bloomberg analysis.

‘Bit Like China’

Still, Saurabh Dinakar, Morgan Stanley’s head of Asia-Pacific global capital markets, is expecting 2026 to be another bumper year where proceeds could set a new record.

“It’s a little bit like China 10 to 15 years back,” he said of the India IPO rush, adding that economic conditions in the South Asian nation, like a growing middle class and increasing access to the internet, are now similar to those that helped mint China’s homegrown tech giants that later went on to become some of the most prominent publicly listed firms.

India is home to more than 90 private firms whose value exceeds $1 billion, making the country the third-largest market for unicorns after the US and China, according to data provider Tracxn Technologies Ltd.

A favorable regulatory backdrop is also helping. India’s securities market regulator in September tweaked norms to make it easier for very large private firms to go public, while the central bank this month relaxed rules on loans to investors participating in IPOs.

IPOs are bringing new themes such as fintech and renewables, as well as companies in sunrise sectors that are currently not available in the secondary market, said Rita Tahilramani, a Singapore-based investment director at Aberdeen Investments.

“The breadth of the market is increasing because of the nature of companies that are coming,” she added. “Liquidity has been abundant.”

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Published on October 29, 2025