NBFCs Gear Up for IPO Rush in FY26 to Raise ₹30,000 Cr: Report

IPO Wave Building Among NBFCs as FY26 Approaches

India's non-banking financial companies (NBFCs) are preparing for a strong comeback in the capital markets, with over ₹30,000 crore expected to be raised via initial public offerings (IPOs) in FY26, according to a report by investment banking and market research firms. This anticipated flurry of activity follows a muted period for NBFC listings and reflects improving macroeconomic conditions, stronger balance sheets, and increasing investor appetite.

The resurgence in public listings is being driven by a mix of regulatory alignment with banks, investor confidence in the sector, and the need to meet capital adequacy norms under the Reserve Bank of India’s (RBI) scale-based regulation framework.

Notable Players in the Pipeline

Several prominent NBFCs are reportedly at advanced stages of preparing for IPOs. Among them:

• IIFL Finance’s housing finance arm

• Hero Fincorp

• Muthoot Microfin

• Northern Arc Capital

• Arohan Financial Services

• Five-Star Business Finance’s associate units

These companies have either received SEBI approval or are in the process of filing draft red herring prospectuses (DRHPs). In some cases, IPO plans that were delayed in FY24 due to market volatility or regulatory changes are being revived with revised strategies and refreshed valuations.

Regulatory Clarity Spurs Action

The RBI’s push to tighten supervision over NBFCs and bring them closer to banks in terms of regulatory norms has played a dual role — increasing compliance costs on one hand, while also instilling greater confidence among investors.

“The RBI’s scale-based regulatory framework has been a turning point,” said Neeraj Mehta, Capital Markets Head at a Mumbai-based investment advisory. “Larger NBFCs, classified as Upper Layer entities, need to maintain higher capital buffers and improved governance. An IPO is the most efficient route to both meet capital needs and showcase transparency.”

Additionally, the implementation of Indian Accounting Standards (Ind-AS), loan provisioning norms, and stricter NPA classification guidelines have improved the financial discipline of NBFCs — making them more attractive to institutional investors.

Buoyant Market Sentiment and Past Successes

The broader stock market rally and the successful listing of NBFCs in the past 12-18 months have emboldened promoters to revisit IPO plans. SBFC Finance, Five-Star Business Finance, and Muthoot Microfin have all posted positive listing gains and maintained stable post-IPO performance.

“Market conditions are favorable,” noted Ritika Bhandari, Analyst at Axis Securities. “Domestic and foreign institutional investors are hungry for quality lending businesses, especially those catering to the underserved MSME and retail segments. NBFCs fit that niche well.”

The average listing gain for finance sector IPOs in FY25 was approximately 17%, with a subscription multiple of over 12x for many mid-cap offerings.

Growth in Credit Demand Fuels Expansion

NBFCs play a critical role in extending credit to sectors often underserved by traditional banks — such as small businesses, informal workers, and rural consumers. With India’s economy on a steady growth trajectory, the credit demand from these segments is expected to grow at 14–16% annually over the next three years.

To capitalize on this opportunity, many NBFCs require significant capital infusion to expand their loan books, invest in digital infrastructure, and maintain strong capital adequacy ratios. Public listings are viewed as a sustainable source of funding compared to private equity or debt markets, which often come with higher costs or ownership dilution.

Analyst Caution: Focus on Profitability and Asset Quality

While the IPO rush indicates confidence, analysts urge investors to remain cautious and differentiate between NBFCs based on profitability, asset quality, and operational efficiency.

“Not all NBFCs are created equal,” said Vikram Shah, Lead Credit Analyst at ICICI Securities. “Those with high NPAs or exposure to risky asset classes may face investor skepticism. The focus is shifting from growth to quality — and investors will reward only those who demonstrate sustainable margins and governance discipline.”

Some analysts also warn of valuation concerns, especially if multiple listings crowd the market simultaneously, potentially diluting investor interest and reducing pricing power.

Investor Outlook: Cautious Optimism

From an investor perspective, the upcoming IPOs present opportunities to participate in India’s credit expansion story — particularly in niche lending areas such as gold loans, microfinance, fintech-enabled credit, and used vehicle financing. However, due diligence remains key.

Retail and institutional investors are advised to study the track records of promoters, portfolio quality, cost of funds, and regional diversification before investing. Government support for MSMEs and rural sectors adds tailwinds to the NBFC business model, but interest rate cycles and credit risk remain key watchpoints.

FY26 is shaping up to be a watershed year for NBFCs in India’s public markets, with over ₹30,000 crore expected to be raised through IPOs. While market sentiment, regulatory clarity, and credit demand create a conducive environment, the success of these IPOs will ultimately depend on investor trust in the business fundamentals and governance of each issuer.

For NBFCs, this could be a defining moment to build long-term capital, broaden their investor base, and elevate their profile in India's rapidly evolving financial services ecosystem. For investors, the opportunity is promising — but warrants a selective and research-driven approach.