Is India’s hot IPO market cooling, or is it a blip?

This report is from this week’s CNBC’s “Inside India” newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. Like what you see? You can subscribe here.

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Twelve months ago, India’s initial public offering market was booming, with tech startups from food and grocery delivery player Swiggy to electric two-wheeler manufacturer Ola Electric at the cusp of their debut.

Many companies wanted to go public in the South Asian powerhouse, riding on the coattails of India’s growth story.

This year, however, there has been a pronounced change.

There have been just 99 listings so far, compared to 147 in the same period a year ago, according to FactSet data.

Several companies, including education loan provider Avanse Financial Services, contract drug manufacturer Anthem Biosciences and LG Electronics’ India unit, have put their listing plans on hold given weak investor sentiment and the bleak macroeconomic outlook, despite having received approval from the Securities and Exchange Board of India (SEBI).

To add to that, the debut of electric scooter maker Ather Energy on May 6 — which came after a two-month lull in mainboard listings — failed to alleviate market concerns. The stock is down more than 3%, after opening at 328 Indian rupees ($3.79) per share — a premium of around 2% to its issue price of 321 rupees.

“The IPO market was dismal, especially in the first quarter, because of a weak rupee and global volatility from the wars and constantly evolving tariff situation,” Peeyush Mittal, portfolio manager at Matthews Asia, told CNBC’s Inside India.

Additionally, foreign portfolio investments fell 220% in the first five months of this year compared to the same period in 2024, according to the National Securities Depository.

A more pressing problem, however, has been the impact of slowing consumption levels on corporate earnings, Rishika Chandan, managing partner at Venturi Partners, said.

Many good private equity-backed consumer brands, which would have historically posted a 35% to 40% jump in their profitability per annum, only grew 15% to 20% in FY2025 ended March, no thanks to tighter consumer purse strings, Chandan added.

“That is not a great number to go to the market with,” she said, adding that companies have now pushed back their listing plans, in part, to capitalize on higher sales during festive seasons later in the year.

While the Reserve Bank of India’s recent rate cut and the government’s measures to stimulate consumption may eventually translate into higher spending, Chandan says more time will still be needed for corporates to see stronger revenue and profit numbers.

“Anybody wanting to go public will likely stretch it out and wait for the valuation markup. That will also give them higher forward value, which will allow for an IPO underwriting based on the evaluation of profitability,” Chandan added.

As the year stretches into the second half, there has been a subtle shift in the Indian markets, leading to hopes of a pickup in listing momentum.

For instance, $6.4 billion was raised from the Indian markets through share sales in May, making it the highest monthly total since December 2024. Block trades were the biggest contributor at $5.5 billion. The sales activity shows no signs of slowing down this month, with at least 10 blocks raising $1.2 billion in just the first week, per data compiled by Bloomberg.

India’s “fundamentals are solid,” Dhruba Jyoti Sengupta, CEO of Wrise Wealth Management Middle East, says.

“With over $12 billion in SEBI-cleared IPOs and more than 130 companies in the wings, India’s primary market is simply pausing before its next leap. The second half of the year will tell a very different story,” he told CNBC’s Inside India.

Sengupta foresees several listings, including that of Reliance Jio, Tata Capital and LG Electronics India.

The Mukesh Ambani-backed Reliance Jio is expected to go public later this year in an approximately 400 billion Indian rupee listing. Sengupta expects the company — which is the telecommunications arm of Reliance Industries — to be “one of India’s largest ever [listings], showcasing the ambition to monetize a digital ecosystem at scale.”

Similarly, Tata Capital is reportedly slated to get regulatory approval to list for $2 billion soon. The listing of the Tata Sons subsidiary, which provides a range of personal finance and corporate loans, “signifies how even conservative conglomerates now view public capital as strategic, not just financial,” Sengupta noted.

Elsewhere, the wealth manager considers LG Electronics India’s listing a “game changer.” If successful, it will indicate foreign multinationals’ interest in Indian markets given its “domestic retail flows and regulatory stability,” he added.

Among startups, Venturi’s Chandan and Nicholas Cator are keeping a close eye on the listing of Lenskart, which is backed by Softbank, KKR and Temasek. The eyewear company is reportedly close to filing a draft of its preliminary proposal and may raise $1 billion from its listing.

Cator, founder and managing partner at Venturi, is curious about how much it can amass on the public market. “Lenskart has done well as a company, and its numbers are good. So, its listing will be a good indicator for private investors on how to value companies, especially in pre-IPO rounds.”

Other listings Carter and Chandan are watching include that of cleaning and personal care services provider Urban Company, which filed its documents in April and jewelry player Bluestone, which is gunning for unicorn status ahead of its IPO.

The optimism of India’s IPO market is sometimes marred by concerns over elevated valuations of its stock market.

Matthews Asia’s Mittal foresees some marquee IPOs in India coming in at a 25% to 30% discount to the leading player in their space, unlike last year when many IPOs were priced at a premium.

“Everybody wanted to take the valuation higher, but our expectation is that valuations are already normalizing, largely because some of the IPOs in the tail end of 2024 haven’t really performed well,” he said, naming Swiggy and Ola Electric as such companies that are now trading below their debut price.

Going forward, Mittal and WRISE’s Sengupta expect India’s capital markets to be buoyant with new equity issuances and a potentially stronger listing pipeline as the country grows to soon become the fourth largest in the world.

“India today is reminiscent of the U.S. in the early 2000s and China in the post-2009 era — when IPO markets matured from speculative growth to strategic listings. India is no longer just an emerging market — it’s becoming an IPO destination with depth, diversity, and discipline,” Sengupta said.

Modi and Trump disagree on U.S.’ role in Pakistan ceasefire. Indian Prime Minister Narendra Modi held a phone call with U.S. President Donald Trump Tuesday, in which he “clearly conveyed” that the South Asian nation “does not and will never accept mediation” in its conflict with Pakistan, according to a statement by Foreign Secretary Vikram Misri.

India is considering expanding its production of rare earth elements. As China imposes tighter restrictions on its export of rare earths — which are crucial in the manufacturing of electric vehicles and military equipment — Indian officials are evaluating the potential of Indian Rare Earths, a government-owned company, to fill the gap in the supply chain.

‘No major safety concerns’ on Air India’s fleet. The Directorate General of Civil Aviation, India’s aviation safety watchdog, said Tuesday it had inspected Air India’s Boeing 787 fleet and did not find any major anomalies. The airline is cutting international flights on its widebody planes by 15% for the next few weeks. An Air India plane bound for London crashed on June 12 in Ahmedabad, India, killing all 242 passengers except one.

Indian stocks were trading flat Thursday as investors weighed the U.S. Federal Reserve’s decision to keep interest rates steady, amid the ongoing Israel-Iran crisis.

Since the start of the year, the 50-stock Nifty benchmark has risen 4.58%, while the BSE Sensex has gained 3.86%.

The benchmark 10-year Indian government bond yield was up at 6.291%.

On CNBC TV this week, Dave Ernsberger, co-president of S&P Global Commodity Insights, discussed the necessity for India to build up its energy reserves, especially in light of potential disruptions to global oil supply. However, that goal cannot be met solely by expanding oil and gas production. “The only way India will get energy independence, truly, is by building out domestically supplied renewable energy sources,” Ernsberger said.

Meanwhile, Anand Gupta, managing director at Allianz Global Investors, said that although India’s defense sector has a “longevity of growth” and will gain market share, stocks are not trading at a “reasonable price.” There are better stock-picking opportunities in India’s market, Gupta said, such as those in its consumer discretionary sector.

On Monday, the Purchasing Managers Index reports, which measure activity in India’s manufacturing and services sectors, will be out. Multiple mainline companies will list publicly in the coming week, including recyclables company Aten Papers and Foam, solar pump manufacturer Oswal Pumps and construction supply company Arisinfra Solutions.

June 20: Aten Papers and Foam IPO, Oswal Pumps IPO

June 23: India HSBC flash manufacturing and services PMI for June

June 25: Arisinfra Solutions IPO

June 26: U.S. GDP final reading for Q1