The pace of initial public offerings (IPOs) could slow in 2026 unless market sentiment stabilizes, warn merchant bankers amid the intensifying US-Israel-Iran war.
“If current market conditions persist, IPO activity is likely to moderate meaningfully compared to 2025,” said Gaurav Bhandari, chief executive at financial services provider Monarch Networth Capital Ltd.
Iran’s retaliatory strikes on energy infrastructure in West Asia, along with its move to shut the Strait of Hormuz, have disrupted oil supplies and pushed up crude prices—an especially sensitive issue for India, which imports roughly 80% of its fuel.
The turbulence has already weighed on domestic markets. The country's benchmark indices have plunged about 4% since the beginning of the war until 11 March. Trading activity has also cooled, with Nifty 50 market turnover falling by more than 21% over the period.
The end of the boom cycle
The war deals a triple blow to Indian companies—high crude prices, supply-chain disruptions, and a weakening rupee—while its inflationary impact could weigh on consumer demand.
“We are seeing a lot of companies deciding to wait out this phase of market correction as they have one year to launch their IPOs, so waiting for a stable environment to launch,” said Dharmesh Mehta, managing director and chief executive officer (CEO) of investment bank DAM Capital Advisors Ltd.
While Mehta didn't elaborate on which of his mandates were delayed, he said that any company with a Sebi nod is likely to wait out a turbulent few weeks.
Other merchant bankers that Mint spoke to said IPOs of renewables firms and high-profile startups, including payment firms, private equity-backed quick commerce firms, and hospitality brands, might get delayed by at least a month or two as companies assess the right time for entering the market.
Earlier this month, XED Executive Development rescheduled its $12 million GIFT City IPO to 16 March from 6 March, citing West Asian geopolitical uncertainties.
The shift in sentiment could slow IPO launches in the near term, potentially ending a multi-year boom, even though the pipeline of companies planning to tap the market remains large.
The large planned offers for the year include National Stock Exchange, Reliance's Jio Platforms, India's largest asset manager, SBI Funds, and e-commerce platform Flipkart.
Listing performance tepid
India emerged as the second-largest IPO market globally by proceeds and the most active by number of deals in 2024, with companies raising about ₹1.6 trillion across more than 300 listings. The momentum carried into 2025, when 373 IPOs—including 103 mainboard listings—mobilized roughly ₹1.95 trillion.
However, listing performance had already begun to show visible signs of cooling despite the strong issuance cycle. As of 12 March, returns from 2026 IPOs have averaged a 0.3% premium across 45 issues, the weakest aggregate listing performance since at least 2019, according to data from market intelligence platform PRIME Database.
The picture is similar for mainboard listings. The 11 mainboard listings in 2026 generated an average listing premium of 2%. Only four of these mainboard equities debuted above their issue price on their listing day, and the data is heavily skewed by Bharat Coking Coal Ltd's 77% listing premium. PNGS Reva Diamond Jewellery Ltd, Gaudium IVF & Women Health Ltd, and Sedemac Mechatronics Ltd listed at premiums of 7.24%, 1.87%, and 13.54%, respectively.
For comparison, at the peak of the IPO boom, the average listing gain across all issuances was 49% in 2024. The average listing gain for the 2025 cohort fell to 10.6%. That year, the number of mainboard equities achieving listing gains stood at 67% of total issuances, before declining to 36% in 2026.
"Valuations have corrected in the IPO market, and so has the interest in new companies, as the listed firms are now available at attractive valuations. That is evident from the string of discounted listings and muted retail participation in IPOs,” said Mehta
Retail and high-net-worth-individual participation in primary markets has also softened following a string of muted debuts, according to bankers.
“Retail and non-institutional investor participation has gone down dramatically this year due to weak listing performances in the recent past,” said Kamraj Negi, MD and CEO-investment banking at financial services firm Pantomath Group.
Institutional investors, too, have become more cautious. Mutual funds, which are key anchors in many public offerings, have seen subdued performance in portfolios with heavy exposure to small- and mid-cap stocks, limiting their appetite for fresh allocations, he added.
Realistic expectations
Despite the current headwinds, dealmakers maintain that the underlying pipeline remains robust.
More than 230 companies have filed draft red herring prospectuses (DRHPs), with the markets regulator, while over 100 mainboard IPOs have secured regulatory approval so far in 2025-26, according to Pantomath.
“This does not mean the IPO market will shut down, but issuers will need to be realistic. Businesses with strong earnings visibility, sound balance sheets, and reasonable valuations can still attract capital. However, transactions that attempt to stretch valuations may struggle,” said Bhandari.
There's a long line of companies waiting in the wings for the right time to launch their offers, said Yash Ashar, senior partner at law firm Cyril Amarchand Mangaldas. "There may be some additional costs for investor reach out and document updation, but those are not likely to be material once the IPOs go through," Ashar said.
Merchant bankers are also keeping their fingers crossed that 2026 will mirror stock market trends seen in 2025, when sentiment stabilized in the latter part of the year.
The year 2026 is not very different from last year, as IPO activity rebounded in the latter part of 2025, said Negi. “We see potential in energy and a potential revival of financial services in capital market issuances. This year may also see a lot more qualified institutional placements compared to last year.”