India's IPO market looks poised for a solid show in FY26: Key factors at play

IPO Market in FY26: Strong Momentum Building Up

India’s Initial Public Offering (IPO) market appears primed for a robust performance in FY26, driven by favorable macroeconomic conditions, sustained investor appetite, regulatory tailwinds, and a strong pipeline of companies looking to go public. Following a buoyant FY24 and a stable FY25, market analysts are optimistic that FY26 could witness a breakout year in terms of both issue volume and capital raised.

“India's growth narrative remains intact. The IPO pipeline is rich, particularly in the technology, renewable energy, financial services, and consumer sectors. FY26 could well surpass the records seen in 2021, especially if global liquidity remains supportive,” said Siddharth Kothari, Chief Investment Strategist at Omkara Capital.

FY25: A Steady Foundation

FY25 is laying the groundwork for a strong FY26. More than 80 companies have filed their Draft Red Herring Prospectus (DRHP) with SEBI in FY25, with an estimated total fundraising potential exceeding ₹1.2 lakh crore. The sustained activity, despite global uncertainties and election-related volatility in H1FY25, signals rising confidence among issuers and investors alike.

So far, listings like Go Digit General Insurance, Awfis Space Solutions, and TBO Tek have received positive responses, underlining investor appetite for scalable, tech-driven, and profitable businesses. The Nifty SME Emerge index has also outperformed broader markets, indicating a healthy appetite for small- and mid-cap IPOs.

Key Drivers for FY26 IPO Boom

1. Robust Economic Outlook

India continues to be the fastest-growing major economy, with the IMF projecting a 6.8% GDP growth in FY26. “This macro backdrop is ideal for companies to go public. Strong consumption, infrastructure push, and formalization of the economy support business scalability, which is essential for IPO success,” said Ritika Mehta, Head of Research, FinPoint Securities.

2. Government Disinvestment Plans

The central government is likely to step up its disinvestment drive in FY26, potentially unlocking several large-scale IPOs from state-run enterprises. The long-awaited LIC follow-on offering or strategic disinvestments in entities like Shipping Corporation of India and Concor could add depth and volume to the primary market.

3. Startups Eyeing Public Debut

Post-Zomato and Nykaa’s listing wave in 2021–22, startup IPOs had cooled. But FY26 may mark a comeback for profitable digital-first companies. Unicorns like Ola Electric, Swiggy, FirstCry, and MobiKwik are reportedly preparing for a public listing, encouraged by improved market sentiment and better business metrics.

4. Strong FPI and DII Inflows

With India’s inclusion in global bond indices and stable rupee outlook, foreign portfolio investors (FPIs) are expected to increase their exposure in equities. Domestic institutional investors (DIIs), led by mutual funds and insurers, are also sitting on strong SIP flows and are likely to support IPO subscriptions actively.

Regulatory Reforms Boosting Transparency

SEBI’s proactive stance is aiding the IPO ecosystem. Recent changes like tighter disclosure norms, clarity on grey market premiums (GMP), and faster listing timelines have enhanced investor confidence.

“The shortening of the T+3 listing timeline to T+1 and the introduction of ASBA-like facilities for retail investors on UPI have been game changers. These reforms improve liquidity turnaround and reduce grey market manipulation,” noted Amitabh Rajan, Partner at AlphaEdge Law Advisors.

Sector-Wise Trends to Watch

• Technology: SaaS, fintech, and AI-driven firms are expected to dominate.

• Green Energy: Solar module makers, EV charging infra companies, and battery tech firms could hit the bourses.

• Financial Services: Fintech NBFCs and digital insurers are actively exploring IPO routes.

• Consumer & Retail: D2C brands with profitability metrics may get better valuation traction.

Risks That May Temper Enthusiasm

Despite optimism, a few headwinds could dampen momentum. These include:

• Global rate hikes if inflation spikes again in the US or Europe

• Geopolitical tensions in the Middle East or Indo-Pacific

• Valuation mismatches, especially among unprofitable startups

• SEBI scrutiny on IPO pricing and promoter conduct, particularly in light of past controversies

“IPO investors need to be cautious of hype-driven valuations and prioritize companies with sustainable cash flows, governance, and sectoral tailwinds,” warned Ramesh Damani, veteran investor and market commentator.

Investor Outlook: Cautiously Optimistic

Retail and institutional investors are expected to remain discerning in FY26, focusing on quality over quantity. The rise of tech-savvy investors and growing financial literacy is likely to help filter speculative plays.

“FY26 could be a year of selective exuberance. Companies with proven track records, strong promoter integrity, and scalable business models will dominate subscription charts,” said Swati Shah, Portfolio Manager at Varuna Wealth Advisors.

Investors should track anchor investor interest, subscription patterns, GMP trends, and post-listing performance for informed decision-making.

India’s IPO market is setting the stage for an action-packed FY26. As economic fundamentals align with strong investor sentiment and regulatory clarity, the coming fiscal could prove to be a golden year for public listings. While not without risks, the environment favors well-prepared companies and discerning investors looking to ride the next growth wave of India’s capital markets.