India’s IPO Market Shines Despite FII Outflows: A Snapshot of 2025 Trends

India’s IPO market in 2025 raised $14.2 billion, ranking fourth globally. Seventy-four companies secured ₹85,241 crore, with three major IPOs targeting ₹30,000 crore more. Despite $18 billion in FII outflows from secondary markets, $5 billion flowed into IPOs, reflecting investor preference. IPOs outperformed the Nifty index in recent quarters, with smaller offerings yielding higher returns. While long-term gains remain inconsistent, India’s IPO market shows resilience and growing global significance.

India’s primary markets have had a remarkable year in 2025, securing the fourth-largest global tally in funds raised via initial public offerings (IPOs). According to a report by Bernstein, Indian IPOs amassed $14.2 billion, trailing behind the United States ($52.9 billion), Hong Kong ($23.4 billion), and China ($16.2 billion). This milestone highlights the country's growing prominence in the global IPO space, even amidst challenging secondary market conditions.

In rupee terms, 74 companies collectively raised ₹85,241.08 crore in 2025. Notably, this figure excludes three major IPOs—WeWork India, Tata Capital, and LG Electronics India—that have recently opened for subscription and aim to bring in an additional ₹30,000 crore. The total IPO proceeds for the year mark the third-highest annual amount in India over the past five years, trailing only ₹1,59,783.76 crore raised from 91 IPOs in 2024 and ₹1,18,723.17 crore raised from 63 offers in 2021.

Foreign Investors Shift Gears

Despite foreign institutional investors (FIIs) pulling out approximately $18 billion from India’s secondary markets this year, they have poured $5 billion into primary market offerings. This divergence reflects a clear preference among FIIs for IPOs over secondary market equities, a trend emphasized in a note by Bernstein’s Venugopal Garre and Nikhil Arela.

Interestingly, this activity contrasts sharply with broader equity market performance. Year-to-date (YTD) returns for India’s equity markets in US dollar terms have been flat, underscoring the lack of momentum in secondary markets compared to the enthusiasm for new listings.

IPOs Outperform Broader Markets

Bernstein’s analysis of 161 companies that went public since January 2024 reveals that these newly listed stocks have often outperformed broader market indices. In five of the last seven quarters, IPOs have delivered better returns than the Nifty index, with 61% of the listings outperforming the index in the past six months.

On average, IPO stocks provided listing gains of 22%, making them an attractive short-term investment. However, the report cautions that long-term performance has been less favorable, with roughly half of the stocks delivering negative returns after three months or more. Over the last 21 months, 53% of IPOs delivered double-digit gains, with average listing gains of 22%.

The study also notes a correlation between heavy IPO activity and increased FII outflows from secondary markets, suggesting that institutions may be leveraging their primary market gains to exit secondary market positions.

Smaller IPOs, Bigger Returns

Sectoral trends indicate that consumer tech, green energy, and digital industries were well-represented in the IPO landscape, accounting for 16% of total listings. Furthermore, smaller IPOs have consistently outperformed their larger counterparts. For instance, IPOs with issue sizes below $20 million delivered an average return of 40%, while those in the $20-$40 million range achieved 31% returns. In contrast, mega-IPOs exceeding $1 billion yielded comparatively modest average returns of 9%.

A Mixed Year with Promising Insights

India’s IPO market in 2025 has illustrated resilience and investor interest despite wider economic challenges and tepid secondary market performance. The preference for smaller-sized offerings, coupled with the strong performance of many new listings, underscores the opportunities within the primary markets. While long-term returns remain inconsistent, the appetite for IPOs signals a robust pipeline for companies seeking to go public in India. As the year closes, all eyes will be on how these trends evolve in the coming quarters.