IPO market on hold: Stock market volatility forces companies to reconsider listings

The recent correction in the Indian stock market has pressed the panic button for the primary markets as well. The recent slump has brought the initial public offering (IPOs) to grinding halt, with a number of companies postponing or withdrawing their stock market listing plans.

The wrath of dumping of Indian Equities has not even spared the SME segment. Despite having the a few issues hitting the street, the action in SME IPO space remained insignificant in terms of number of issues, subscription and listing gains. The current month has been a dull month for SME segment as well.

Despite receiving SEBI approvals, some companies have delayed or paused their IPO listings due to market volatility, weak investor sentiment and unfavorable valuations, said market experts. Factors such as global economic uncertainty, fluctuating interest rates, and sector-specific challenges have made firms cautious about their public debut, they add.

The IPO market in 2025 has been relatively quiet compared to 2024 due to a combination of market volatility, liquidity concerns, and regulatory scrutiny. Uncertainty from global geopolitical tensions and fluctuating interest rates has made investors more cautious, while higher bond yields and a tighter monetary environment have reduced excess liquidity, impacting risk appetite, said Bajaj Broking Research.

"Additionally, concerns over high valuations have led many companies to delay their listing plans, fearing a lack of investor enthusiasm. Stricter SEBI regulations on disclosures and pricing have also made companies reconsider their IPO timelines. The heavy influx of IPOs in 2024 led to a saturation effect, making investors more selective this year," it said.

The first two months of the current calendar witnessed 20 SME IPOs each, raising Rs 880 crore and Rs 930 crore, respectively. On the other hand, March has seen only six SME IPOs so far, raising 170 crore from investors. Interestingly, the total funds raised by SME entities in the first quarter of the current calendar stood at Rs 1,980 crore.

Increased liquidity, regulatory reforms, and deferred IPOs further supported growth. Increased retail participation and
robust mutual fund investments bolstered liquidity, while initiatives like T+3 listings, a reduced lock-in period under the IGP program, and IPOs deferred from 2022–23 drove IPO activity, said Bain Capital in its recent report.

On the mainboard, no IPO has hit the street in March 2024 so far, with none other announced yet. Six mainboard IPOs raised Rs 4,845 crore in January 2025, while three other raised Rs 10,878 crore during the previous month. However, some reports suggest that NSDL and Hero MotoCorp Ltd-backed Ather Energy are likely to launch their IPOs soon.

In the calendar year 2024, SME board saw 240 IPOs mopping up around Rs 8,761 crore from the investors. In the year 2023, a total of 182 SME companies launched their public offering and raised a total of Rs 4,686 crore from investors. The SME IPO index is down 30 per cent in the year 2024 so far, signalling lacklustre sentiments of the investors towards SME space.

DRHP pertaining to IPO on SME segment, would now be available for public comment on SME exchange, website of issuer and merchant banker to the issue. Public would be made aware by way of a public advertisement that SME IPO DRHP is available for public comments, allowing the public at large to submit comments or raise complaints, said Makarand M Joshi, Founder Partner, MMJC and Associates, a corporate compliance firm.

"Sebi has increased the minimum application size for SME IPO to two lots making entry stricter to avoid unnecessary speculation in SME IPO. This would help protect the interest of gullible investors who generally invest looking at escalating share prices. SEBI has also reduced the threshold for monitoring of SME IPO proceeds to 50 crore due to which more SME IPO would have to account for usage of funds," he added.