The Indian IPO market has witnessed a dynamic year in 2025, characterized by record-breaking fundraising and a notable shift in the utilization of IPO proceeds. While the IPO segment continues to be a capital-raising avenue for unlisted companies, a significant portion of the funds raised is being directed towards capital expenditure (capex), even as many companies adopt a cautious approach, choosing to deleverage and consolidate their financial positions.
IPO Market Overview
In 2025, the Indian IPO market demonstrated its resilience and attractiveness to both domestic and foreign investors. Approximately 81 mainboard issues raised ₹1,21,042 crore. This strong performance positions India as a leading player in the global IPO landscape. Several factors contributed to this surge, including strong demand from retail investors, robust participation from overseas investors, and easing fears of a global recession. This encouraged companies to revive deferred stake-sale plans in anticipation of improved market conditions.
Capex Deployment
A noteworthy trend in 2025 is the increasing allocation of IPO proceeds towards capital expenditure. A Bank of Baroda study revealed that 26% of funds raised through IPOs are earmarked for capex, while a larger portion is allocated for debt repayment, investments in subsidiaries, and reducing working capital borrowings. This indicates that while companies are leveraging the IPO market to fund expansion plans, they are also prioritizing balance sheet optimization.
India Inc.'s Capex Plans
Corporate India is preparing for a substantial surge in capital expenditure over the next five years, with projected investments doubling to ₹72,72,600 crore (US$ 850 billion). This expansion is expected to be spearheaded by the power transmission, airline, and green hydrogen sectors. The top 100 listed companies, with combined revenues of ₹85,56,000 crore (US$ 1 trillion) and EBITDA of ₹12,83,400 crore (US$ 150 billion) in FY25, are expected to primarily rely on internal accruals to support these investments.
Offer for Sale (OFS) Dominance
Despite the increased focus on capex, a significant portion of IPO fundraising in 2025 came from Offer for Sale (OFS) by promoters, rather than fresh capital infusion. 63% of the ₹1.54 lakh crore raised through IPOs was from OFS, with the remaining 37% from fresh issues. This underscores the preference of promoters to monetize their stakes. This pattern signals a structural shift where IPOs are increasingly used as liquidity events for existing shareholders, with a focus shifting away from capital growth.
Sector-Specific Investments
The power and transmission sector is expected to represent the largest share of the projected capex, accounting for ₹25,66,800 crore (US$ 300 billion). Major players such as NTPC, Tata Power, and Power Grid Corporation are expected to lead this drive. The Tata Group is set to allocate ₹10,26,720 crore (US$ 120 billion) towards aviation, semiconductors, and electronics, while the Adani Group plans to commit ₹1,71,120 crore (US$ 20 billion) annually. In the airline sector, an estimated ₹6,41,700 crore-₹8,55,600 crore (US$ 75–$100 billion) will be invested in fleet expansion by 2035.
Balancing Growth and Financial Prudence
While India Inc. is embarking on an ambitious investment drive, companies are also keen on maintaining financial prudence. S&P Global Ratings anticipates that most companies will maintain sound credit profiles, thanks to robust financial positions and strong cash generation capabilities. Companies are deleveraging and using IPO proceeds to strengthen their balance sheets.
Conclusion
The Indian IPO market in 2025 presents a mixed picture. While IPOs are providing companies with capital for growth and expansion, a considerable portion of the funds raised is being used for deleveraging and providing exits for existing shareholders. Despite this, the increased allocation towards capex signals a positive trend, with companies investing in future growth engines across various sectors. As India aims to become a $7 trillion economy by 2030, strategic deployment of IPO funds, coupled with prudent financial management, will be crucial in achieving this ambitious goal.
