India IPO market maturing; investors seek profits & fair valuations: Grant Thornton Bharat

India's initial public offering market entered a more mature phase in FY26, with investors turning more selective even as fundraising hit record levels, according to a Grant Thornton Bharat report. The report said issuer quality, earnings visibility, governance standards and valuation discipline became more important in determining IPO outcomes, signalling a shift from the liquidity-driven momentum seen in FY25.

Grant Thornton Bharat said overall IPO activity remained strong during FY26, but the underlying pattern of demand changed. A total of 366 IPOs were launched across the mainboard and SME segments, raising about Rs 1.9 lakh crore. Mainboard activity stood out, with 109 IPOs raising nearly Rs 1.77 lakh crore, a three-year high. India also remained among the world's leading IPO markets by volume, accounting for 14 per cent of global IPO listings in March 2026.

Despite the strong headline numbers, the report said investor behaviour became more discerning. FY26 saw a move away from retail- and non-institutional investor-led momentum towards QIB-led demand. According to Grant Thornton Bharat, investors placed greater emphasis on governance, earnings quality and pricing, rather than relying mainly on growth narratives and abundant market liquidity.

The report said this shift was visible in weaker subscription and listing metrics. Average IPO oversubscription nearly halved to 39 times in FY26 from 71 times in FY25, while average listing-day gains dropped to 7 per cent from 29 per cent. The average annual performance of IPOs stood at negative 17 per cent, indicating that strong subscription demand did not necessarily result in sustained aftermarket returns. Smaller issues were affected more sharply, with average listing gains of 2 per cent, compared with about 11 per cent for medium and large offerings.

Grant Thornton Bharat also pointed to rising scrutiny of IPO structures and the use of proceeds. Offer-for-sale transactions continued to dominate mainboard fundraising, accounting for 61 per cent of proceeds, though the share of fresh issues improved to 39 per cent from 35 per cent a year earlier.

Debt repayment accounted for around 26 per cent of funds raised, making it the biggest use of proceeds, followed by capital expenditure and expansion at about 21 per cent. The report said investors are increasingly assessing the mix between fresh issues and OFS as a sign of promoter alignment, capital use and post-listing conviction.

Sector-wise, financial services led FY26 fundraising with around Rs 59,800 crore raised across 12 IPOs, while consumer services and durables also drew strong investor interest. In contrast, capital-intensive and cyclical sectors such as power, telecom and textiles saw weaker debuts.

Looking ahead to FY27, Grant Thornton Bharat said India's primary market should remain constructive but measured, with market timing, valuation discipline, governance readiness, earnings visibility, institutional demand and post-listing communication likely to shape success. The report said the broader trend is clear: India's IPO market is moving from momentum to maturity.