Summary of this article
Phytochem Remedies withdrew its Rs 38.22 crore IPO after receiving only 57 per cent subscription.
SEBI regulations mandate a minimum 90 per cent subscription for a public issue to proceed.
Market volatility, valuation disconnects, and regulatory scrutiny remain the primary triggers for shelving Indian IPOs.
The Indian primary market has witnessed strong participation from investors in 2025. Investor interest in public issues launched on the small and medium enterprises (SME) board also remained strong, with 267 companies tapping the primary market for funds.
Despite the strong investor interest, the second initial public offering (IPO) withdrawal has occurred on the SME board. Notably, the public issue of Phytochem Remedies (India) has been withdrawn. Prior to the withdrawal of the Phytochem Remedies IPO, the public issue of Wagons Learning IPO was withdrawn by the company due to “prevailing market conditions”.
Why Was Phytochem Remedies' IPO Withdrawn
The Phytochem Remedies (India) IPO was officially withdrawn on December 22. The public issue was withdrawn due to it being undersubscribed by investors. This, in turn, stopped the company from proceeding with the public issue as the percentage of subscription did not meet the regulatory mandate specified by the Sebi.
Phytochem Remedies’ public issue consisted of an entirely fresh issue of 3.9 million shares worth Rs 38.22 crore. Phytochem Remedies IPO subscription window opened on December 18 and closed on December 22.
Phytochem Remedies (India) is a maker of corrugated boxes and corrugated board solutions. The company caters to industries like food & beverages, FMCG, pesticides and pharmaceuticals.
According to Sebi’s ICDR Regulations (Issue of Capital and Disclosure Requirements), the IPO of any listing-bound company has to receive a minimum subscription of 90 per cent to be successful. Phytochem Remedies was booked 0.57x or 57 per cent in its three-day subscription window, falling well short of the legal requirement.
Phytochem Chairman and Managing Director Niranjan Surana said in a regulatory filing that unfavourable market conditions and volatility in the capital markets were the reason for withdrawing the public issue.
"The decision to withdraw the Issue has been taken by the management due to unfavourable market conditions and volatility in the capital markets, impacting the overall investor sentiment. Accordingly, the Company shall not be proceeding with the Issue and requests you to kindly take note of the same," Sharma said in a filing.
Typically, IPOs sail through successfully, driven by retail frenzy, market-led triggers and other technical and financial triggers. Here’s a look at some of the common situations where listing-bound companies withdraw their IPOs:
Valuation Disconnect
Sometimes companies withdraw their public issues despite them meeting the minimum subscription requirements set by Sebi. The promoters of the company may feel that the valuation at which the IPO is being done is not in line with the valuation they wish for. Additionally, negative grey market trends can also lead to a public issue being withdrawn, as no promoter wishes for a discounted listing in which the stock debuts below the issue price. A weak D-street debut can damage a brand’s reputation and make future fund-raising difficult. Notably, the last time this occurred was in 2008 amid a global market crash when the public issue of real estate major Emaar MGF was called off.
"Given the prevailing sentiments in the capital markets, it was unclear how well the stock would trade post-listing. It has been considered wiser to revisit the market only when the demand and sentiment are stable and better, providing greater value to investors", Emaar said in a statement.
Global Macroeconomic Shocks
Macroeconomic shocks tend to frame investor sentiment in a major way. In 2025, both the primary market and the secondary market responded to major geopolitical events and trade disruptions. Thus, sudden global events can also dry up the liquidity needed for a successful debut. Major events such as geopolitical tensions like the Russia-Ukraine or sudden US Fed rate hikes can lead to a "Risk-Off" sentiment. This led to companies such as Snapdeal and FabIndia shelving their multi-crore IPO plans in 2022-23.
Regulatory Observations and Scrutiny
Following the filing of a Draft Red Herring Prospectus (DRHP), the capital market regulator often issues "Observations". These observations are similar to queries in nature, and if a company cannot satisfactorily resolve them, they are allowed to withdraw its public issue. Sebi often issues observations related to financial disclosures and the promoter’s background.
It may be better for companies to withdraw their issues voluntarily than to have SEBI formally reject the application, as it may damage the goodwill of the company. In 2024, Trafiksol ITS Technologies IPO was halted after Sebi scrutinised its sudden revenue spikes and business model.
Internal Structural Changes
In some situations companies may decide to withdraw their public issue in lieu of a ‘better deal’. For example a company might decide to go ahead with an alternative fundraising method such as a strategic merger or a strategic Private Equity exit. Floating an IPO can be relatively expensive and requires significant disclosures on the company’s part, thus if a single private investor offers the same capital without the need for public disclosures the company may withdraw its public issue.
Indian mobility startup Ola and hospitality tech platform Oyo deferred and modified their public issue filings following the restructuring of their internal financials or sought private rounds to achieve better valuations later. However, Ola Electric Mobility ultimately went ahead with its public issue in 2024 and its stock listed on the exchanges on August 9, 2024.
IPO withdrawal doesn’t financially impact primary market investors. Applicants do not need to do any manual action for a refund. The ASBA (Application Supported by Blocked Amount) system ensures that the applicant’s funds remain in their account, the blocked amount is released by the bank once the registrar confirms the withdrawal.
However, the withdrawal of Phytochem’s public issue indicates that despite the frenzy seen on D-street, investors are becoming more selective with the companies in which they wish to invest and the "SME Frenzy" seen in 2024 is cooling down. Investor selectiveness hints at investors making more informed and selective decisions and choosing companies that align better with their overall investment goals.
