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Domestic Funds Seek Lower IPO Valuations as Pricing Power Shifts
Companies sell shares to the public through IPOs to raise money.
Investors decide how much those shares are worth.
In 2026, large IPOs generally received lower valuations than they did in 2025.
This suggests investors are being more careful about what they buy.
Domestic investment institutions supplied a larger share of IPO money than they did in 2021.
Some major companies reduced or delayed their planned listings.
Market worries include the Iran war, trade tensions and concerns about artificial intelligence.
Investors now prefer businesses with stronger profits and more predictable earnings.
The median price-to-book ratio for large IPOs fell to 7.4 times in 2026 from 10.2 times in 2025.
Only two loss-making companies joined the large-IPO group in 2026, versus at least five in both 2025 and 2024.
Domestic institutions provided 33% of first-time share-sale proceeds in 2026, up from 24% in 2021.
The National Stock Exchange of India’s IPO was reduced by about 15%, while Zepto and Prestige Estates delayed offerings.
Investors are favoring companies with stronger margins and clearer earnings prospects amid market pressures.
- Who
- Indian companies seeking stock-market listings, domestic institutional investors and other IPO investors.
- What
- Investors are seeking lower IPO valuations and becoming more selective about new share offerings.
- Where
- India’s stock market.
- When
- In 2026, with comparisons to 2025, 2024 and 2021.
- Why
- Indian stocks face pressure from the Iran war, global trade tensions and concerns about the growing artificial intelligence industry, prompting investors to demand stronger margins and clearer earnings visibility.
Investor Selectivity
Company Valuations
Acceptable IPO pricing
Investor Selectivity
Fund managers and investors consider many IPO prices frothy and are seeking lower valuations, stronger margins and clearer earnings visibility.
Company Valuations
Companies seeking listings must recalibrate their valuations and may reduce or delay offerings when market demand is weaker.
Market participation
Investor Selectivity
Domestic institutions are playing a larger role in IPO funding, accounting for 33% of proceeds in 2026 compared with 24% in 2021.
Company Valuations
The increased influence of domestic funds can reduce companies’ pricing power and make successful listings more dependent on investor selectivity.
Key facts
- 2026 median price-to-book ratio
- 7.4 times for IPOs raising at least Rs 1,000 crore
- 2025 median price-to-book ratio
- 10.2 times for the same large-IPO group
- Loss-making large IPOs in 2026
- Two companies
- Domestic institutional share of IPO proceeds
- 33% in 2026, compared with 24% in 2021
- National Stock Exchange IPO
- Downsized by about 15%
- Paused or delayed offerings
- Zepto and Prestige Estates Projects’ hospitality unit
Sources
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