One of the very few mainboard initial public offerings (IPOs) so far this year – Ather Energy IPO – saw a tepid demand on the very first day of its subscription window opening. The issue was subscribed 0.16 times cumulatively. Investors applied for 86.16 lakh shares against the 533.63 lakh shares on offer.
By the end of the day, the quota reserved for Qualified Institutional Buyers (QIBs) was subscribed zero times, while the Non-Institutional Investors (NIIs) quota was subscribed 0.16 times. On the other hand, Retail Individual Investors (RIIs) was booked 0.63 times. The issue was booked 1.78 times by the employees of the company on the first day of bidding.
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Dry Spell In India’s Primary Market
India’s primary market has this year so far witnessed a dry spell, with only nine mainboard IPO listings, excluding Ather Energy IPO. These offerings have collectively raised Rs 15,723 crore.
Of these nine newly-listed companies, most are trading below their respective issue prices.
Axis Capital, in a report on India’s current IPO market, said, “The current atmosphere represents a significant slowdown compared to the momentum witnessed throughout 2024. Subscription levels for recent IPOs have been considerably lower, often in single digits, a trend attributed to increased volatility in the secondary markets. This cautiousness reflects investors' more selective approach in the face of market uncertainties.”
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Why Aren’t Investors Putting In Their Money In IPOs
Manasvi Garg, a Sebi-registered investment advisor, CFA, Founder and Chief Wealth Manager at Moneyvesta, told Outlook Money that India's primary market is currently experiencing a slowdown due to a combination of factors like geopolitical tensions, global trade uncertainties, and weak investor sentiment.
“The recent militant attack in Pahalgam, Kashmir, has heightened India-Pakistan tensions, adding to market volatility, while the ongoing US-China tariff negotiations are creating global economic uncertainty, further dampening investor confidence. In such a climate, investors tend to adopt a cautious approach, which heavily influences their decisions,” Garg said.
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“During bull markets, IPOs often see oversubscription, even for companies with weaker fundamentals. Conversely, in bearish conditions, even strong companies can struggle to attract investors,” Garg added.
He emphasised that this trend is also reflected in the ‘muted’ response to Ather Energy's IPO.
“Despite the company’s strong presence in the growing electric vehicle market, its decision to reduce its valuation by 44 per cent, now targeting Rs 12,300 crore valuation, is indicative of the current market sentiment. The IPO’s grey market premium stood at Rs 0 on the first day of bidding, further highlighting the prevailing caution,” Garg said.
How Primary Market Is Likely To Fare In 2025
Despite a slower start to 2025, data suggests that the IPO pipeline for the remainder of the year is strong. Several high-profile companies like wearable technology company boAt, depository services provider NSDL, consumer electronics manufacturer LG Electronics, e-commerce platform Flipkart, and financial services company Tata Capital, are preparing to list on the D-Street.
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“While the current pace of listings and subscription levels reflects caution among investors navigating volatile market conditions, the substantial pipeline of high-profile upcoming IPOs suggests potential for renewed momentum. The success of these anticipated offerings, particularly a few marquee names, will likely determine whether 2025 can ultimately match or exceed the record-setting performance of the previous year,” Axis said in its report.
