India's Domestic-Driven IPO Boom: How Local Investors Are Transforming the $200 Million-An-Hour Market

LG Electronics India Ltd's $1.3 billion initial public offering was fully subscribed in just six-and-a-half hours on October 7, marking the fastest take-up for a major Indian IPO in 17 years. This milestone highlights why India has become one of the world's hottest IPO markets, with total proceeds approaching last year's record $21 billion.

The current wave of listings represents more than just impressive volumes—it reflects a fundamental shift in investor demographics.

A rapidly growing pool of capital from domestic mutual funds, insurance companies, and millions of retail investors now dominates the IPO landscape, demonstrating an enhanced capacity to absorb substantial share sales. This development is reducing India's equity capital market dependency on foreign funds, creating what many bankers and market observers describe as a self-sustaining IPO ecosystem.

However, this enthusiasm comes with potential risks. Some companies are commanding excessive valuations, while many smaller IPOs have been oversubscribed by more than 100 times, raising concerns about possible corrections that could negatively impact individual investors.

Since the beginning of 2024, local investors have invested 979 billion rupees in IPOs, compared to 790 billion rupees from foreign funds, according to Prime Database. The proportion of domestic investments in initial share sales has steadily increased to nearly 75% for 2025—the highest level for any year with proceeds exceeding a trillion rupees ($11.3 billion).

"The market is experiencing a transformative change," observed Abhinav Bharti, who heads India equity capital markets at JPMorgan Chase & Co. "Households are directing more of their savings into equities through mutual funds, which is channeling capital into financial markets."

Barring unexpected disruptions, this growing capital pool could establish a foundation of demand for the foreseeable future.

Home appliance manufacturer LG's IPO proceeded at an astonishing rate of $200 million per hour. Local investors—both institutions and individuals—accounted for 60% of all bids received during the three-day subscription period, excluding the anchor book allocation. The stock surged 48% when trading commenced.

Among all Indian IPOs raising at least 100 billion rupees, LG's was the fastest to be fully subscribed since Reliance Power Ltd. in January 2008, which sold out—then the nation's largest offering—in under a minute.

The power dynamics shifting in India's IPO arena mirror changes in its $5.3 trillion stock market in recent years, fueled by an unprecedented retail investing boom triggered by the pandemic.

The widespread adoption of mobile trading applications, simplified account opening processes, and abundant investment educational content on social media have created millions of first-time equity investors. More conservative investors are utilizing monthly systematic investment plans to funnel billions into local mutual funds, gaining exposure to a market where the benchmark index is headed for its tenth consecutive year of gains.

Consequently, domestic institutional investors' ownership in over 2,000 companies listed on the National Stock Exchange of India Ltd has increased for five consecutive quarters, reaching 19.2% as of June—the highest level in 25 years, according to exchange data. Meanwhile, foreign portfolio investor holdings have declined to 17.3%, the lowest in more than a decade.

New listings appear to offer superior returns for investors, as Indian IPOs have generated a weighted average return of 18% this year, outperforming the NSE Nifty 50 Index's 9.7% advance. Notably, the benchmark's gain has occurred despite foreign outflows of approximately $16 billion, which are on track to be the second-largest ever recorded. This resilience stems from domestic investors, primarily mutual funds and insurance companies, who have injected over $70 billion into the market.

For prospective issuers, the strong appetite from local investors has made the equity market an attractive venue for raising capital as companies seek to capitalize on opportunities in the world's fastest-growing major economy.

"Every day features a roadshow," noted Vivek Toshniwal, chief executive officer of Mumbai-based family office Plutus Wealth Management LLP, which invests in IPOs. "This level of enthusiasm is unprecedented."

Some local investment bankers are working 15-hour days and forgoing vacations as the pipeline of offerings remains robust. Prime Database reports that 80 companies have secured regulatory approval for IPOs, with another 121 applications under review.

Telecommunications provider Reliance Jio Infocomm Ltd, National Stock Exchange of India Ltd, and Walmart-backed e-commerce company Flipkart India Pvt. are among the highly anticipated billion-dollar-plus offerings expected within the next year or two. Additional significant offerings include Walmart-backed PhonePe Ltd, Hindustan Coca-Cola Beverages Pvt, SBI Funds Management Ltd, Manipal Hospitals Pvt, and Brookfield-backed Avaada Electro Pvt.

This follows more than 300 listings that have already raised nearly $16 billion in 2025, positioning India as the world's fourth-busiest IPO destination globally, according to Bloomberg data. Within Asia, only Hong Kong and mainland China have generated more proceeds than India.

Pratik Loonker, head of equity capital markets at Axis Capital Ltd., indicates that the last couple of years have been the busiest in his two-decade career.

"It's a virtuous cycle" with mutual fund participation, Loonker explained. "They generate alpha, providing reasonable returns for individual shareholders who contribute to these funds. This encourages more individuals to entrust their capital to these asset managers, providing them with additional funds to deploy."

Alpha refers to investment returns that exceed market benchmarks.

October has been a landmark month for India's market. LG's IPO coincided with shadow lender Tata Capital Ltd's $1.7 billion offering—this year's largest listing. SoftBank Group Corp.-backed eyewear retailer Lenskart Solutions Ltd.—one of many Indian startups that received substantial private funding over the past decade—will begin accepting orders for its $828 million IPO at the end of the month.

This diverse group of issuers represents another distinctive feature of the current IPO surge compared to the 2021 boom, which was dominated by tech startups such as food delivery company Eternal Ltd (previously Zomato), digital payments provider Paytm's parent One 97 Communications Ltd, and FSN E-Commerce Ventures Pvt, owner of beauty e-retailer Nykaa.

While those earlier offerings initially generated excitement, concerns regarding valuations and global interest rate increases subsequently led to sharp corrections in their share prices. Among them, only Eternal's shares have managed to recover above their initial offering price.

This remains a potential risk in the current environment, according to Loonker of Axis Capital. Pricing IPOs at inappropriate valuations could dampen an otherwise resilient market.

"If five or six major IPOs perform poorly after listing, that could quickly dampen enthusiasm," he cautioned.

Although Indian IPOs have collectively delivered positive returns this year, nearly half of all listings across the country's main and junior exchanges are trading below their offering prices, according to Bloomberg data. Companies that raised less than $100 million dominate the underperformers, though some larger issuers like shadow lender HDB Financial Services Ltd, with this year's second-largest offering at $1.5 billion, are also trading in negative territory.

Despite increasing volumes, the performance of main board IPOs indicates diminishing opportunities for quick profits. The median return for newly listed stocks one month after debut has decreased to 2.9% this year, down from 22% in the previous year, according to Bloomberg analysis.

Nevertheless, Saurabh Dinakar, Morgan Stanley's head of Asia-Pacific global capital markets, anticipates that 2026 will be another exceptional year with potentially record-setting proceeds.

"The situation resembles China 10 to 15 years ago," he said regarding India's IPO momentum, adding that the South Asian nation's current economic conditions, including an expanding middle class and increasing internet penetration, parallel those that fostered China's homegrown tech giants that later became prominent publicly traded companies.

India hosts more than 90 private companies valued above $1 billion, making it the third-largest market for unicorns globally after the US and China, according to data provider Tracxn Technologies Ltd.

A supportive regulatory environment is also contributing to this growth. In September, India's securities market regulator modified regulations to facilitate public listings for very large private companies, while the central bank relaxed rules on loans for IPO participation earlier this month.

IPOs are introducing new investment themes such as financial technology and renewable energy, as well as companies in emerging sectors currently underrepresented in the secondary market, noted Rita Tahilramani, a Singapore-based investment director at Aberdeen Investments.

"The market's breadth is expanding due to the nature of companies going public," she added. "Liquidity has been abundant."