Global and Indian capital market performance in Q1 2025
After a strong performance in 2024, global markets experienced corrections in early 2025, navigating volatility in the first quarter. The correction continued in April 2025, with the introduction of reciprocal tariff on goods imported into the United States of America (USA) and retaliation tariff imposed by some major economies on USA leading to ‘spiraling effect’ on the global markets. As uncertainties continue to mount, countries are looking to reshape the supply chain, negotiate trade arrangements and also diversify trading partners.
The Chinese government on the other hand are making policy shifts to support private enterprises and thereby concluding their crackdown on industries. This optimism is reflected in major capital raises by industry leaders, with BYD and Xiaomi securing USD 5.6 billion and USD 5.5 billion, respectively, to fuel expansion in the EV sector.
India’s capital markets faced a period of consolidation in the first quarter of 2025, influenced by global uncertainties, including U.S. tariffs and their impact on investor sentiment. Additionally, SEBI’s proactive regulatory measures aimed at ensuring market stability—such as increasing lot sizes, reducing the frequency of weekly index expiries, and raising margin requirements—led to a temporary decline in trading volumes, with daily turnover on stock exchanges falling by over 30% in the past six months.
With the appointment of a new SEBI Chairman in March 2025, investors are now anticipating policy adjustments that could enhance liquidity, attract institutional participation, and create a more conducive environment for sustained growth. As economic fundamentals remain strong and corporate earnings continue to show resilience, India’s capital markets are well-positioned for a resurgence in the coming months.
Updates for the quarter
IPO Markets Overview – Q1 2025:
The first quarter of 2025 began on a modest note, marked by cautious investor sentiment and subdued primary market activity, largely impacted by a downtrend in the secondary market. Despite these headwinds, the quarter witnessed 10 mainboard IPOs, raising a total of INR 15,983 crores (USD 1.88 billion) — reflecting a 23% increase over the INR 12,990 crores (USD 1.53 billion) raised during the same period in 2024.
January 2025 saw 6 IPOs raising INR 2,078 crores, with Laxmi Dental alone accounting for nearly a third of the capital raised. In contrast, February witnessed a significant uptick with INR 13,905 crores raised across just 4 IPOs, largely driven by Hexaware Technologies (INR 8,750 crores) and Dr. Agarwals, which together contributed 85% of the month’s proceeds. March 2025 did not see any listings.
A key trend this quarter was the dominance of Offer for Sale (OFS), which accounted for 89% of the total IPO proceeds (INR 14,254 crores), primarily through the large-ticket issues of Hexaware and Dr. Agarwals. Notably, Hexaware’s return to the capital markets after its 2020 delisting marked the largest IPO in the Indian IT services sector to date. Hexaware’s IPO is the largest technology services IPO globally over the last decade.
Although the current sentiment in the primary market remains tepid, Q1 2025 outperformed the first quarter of 2024. Looking ahead, with a healthy pipeline of companies that have filed their DRHPs, market activity is expected to pick up once stability returns to the broader market.
Listing in Pipeline with SEBI
As of today, SEBI has received approximately 144 draft offer documents, which collectively represented a proposed issue size of over INR 1.47 lakh crores (approximately USD 17 billion).
Certain companies would have delayed the listing time considering the current market conditions. With 87 companies falling under the 3-month to 9-month bucket, we can expect these companies to tap the primary market once the market conditions stabilize.
More than 25% of the companies (26 companies) listed in 2024, filed DRHP for the second time to get listed after an unsuccessful attempt in the earlier filed DRHP. This suggests that a significant portion of companies initially postponed or withdrew their IPO plans, likely due to unfavorable market conditions or strategic timing decisions.
Journey from DRHP to listing
Upon analyzing the 90 main board companies that got listed in the year 2024, we have noted that Companies generally take 190 days to get listed on the
stock exchange after filing the draft offer document. The time taken by the companies to get listed is given below:
While most companies complete the listing process within 120 to 180 days, some, like Vishal Mega Mart Limited and Swiggy Limited, have successfully accelerated their timelines to under 60 days. These companies leveraged the confidential filing route, submitting their draft red herring prospectus (DRHP) to SEBI before making an updated DRHP (UDRHP-I) available for public review.
Companies seeking to go public can choose between two filing options:
1. Regular Filing – A traditional route where the DRHP is made public upon submission to SEBI.
2. Confidential Filing – An option allowing companies to submit the DRHP confidentially before making it public at a later stage, providing greater
flexibility and strategic advantages.
These options offers businesses the flexibility to align their listing strategy with market conditions while ensuring transparency and regulatory compliance.
To read this section in detail, download the pdf.
Issue expenses in an IPO
Overview of the expenses incurred
Expenses incurred in connection with an Initial Public Offering (IPO) are categorized as issue expenses. These typically include payments to Book Running Lead Managers (BRLMs), regulatory fees to SEBI, legal counsel charges, advertising costs, statutory audit fees, and other associated expenditures. On average, companies allocate approximately 6.8% of the total issue proceeds toward these expenses.
However, companies with strong brand recognition and those belonging to well-established, already listed corporate groups tend to have a lower expense ratio due to their market credibility and economies of scale. Notably, in 2024, only four companies managed to keep their expense ratio below 3% due to size of offering as well.
- NTPC Green Energy Limited (part of NTPC Group)
- Bharti Hexacom Limited (part of Bharti group)
- Bajaj Housing Finance Limited (part of Bajaj Group)
- Hyundai Motors Limited
Additionally, government-owned enterprises tend to incur lower IPO expenses due to reduced marketing costs. This trend highlights how established market positioning and strategic affiliations can significantly impact IPO cost efficiency.
One of the interesting facts to note is that as the issue size increases, the IPO expenses as a proportion of issue size reduces and vice versa.
To read this section in detail, download the pdf.
Nature of IPO expenses
Our in-depth analysis of IPO expenses for companies listed on the main board in 2024 has revealed several key trends and insights. One of the most significant findings is that Book Running Lead Managers (BRLMs) fees account for the largest share of IPO expenses, contributing approximately 50% of total costs.
A strong correlation was observed between BRLM fees and issue size. Companies with an issue size of over INR 5,000 Crores paid an average fee of INR 176 Crores, whereas for companies with an issue size below INR 500 Crores, the average fee was at INR 11 Crores.
Beyond BRLM fees, professional services—including payments to legal counsel and statutory auditors—constitute another 15% of total IPO expenses. Together, BRLM fees and professional service charges represent nearly 65% of the overall costs associated with listing on the capital markets.
Additionally, companies incur miscellaneous expenses, which include printing, stationery, regulatory filings, and other administrative costs. While these expenses are relatively smaller in proportion, they remain an essential part of the IPO process.
The data suggests that companies with larger issue sizes benefit from economies of scale, enabling them to manage their IPO expenses more efficiently. As more companies prepare for public listing, understanding these cost structures will be crucial in optimizing financial planning and execution strategies for IPOs.
To read this section in detail, download the pdf.
IPO Returns
Distribution of listing gains by number of issuers
The IPO market in India experienced varied trends in the first quarter of 2025, with 100% of the IPOs listing at a premium in January, averaging a 30% gain to the investors. On the other hand, February displayed a complete shift in trend wherein 3 out of the four companies getting listed at a discounted price. Hexaware Technologies, which marked its return to the capital market, was the only company that could list at a premium during this month. The overall average of the listing gains during the quarter remained positive at 17.53%.
To read this section in detail, download the pdf.
Closer Look: Use of Proceeds
Proposed use of proceeds (Jan to March 2025)
The chart analysis shows that the majority of the capital raised during the first quarter of 2025 was proposed to be used for the repayment of loan of the listed entity and its subsidiaries. Other major utilization of the IPO proceeds include use for general corporate purposes and working capital. The trend in the proposed utilization of the capital raised has remained consistent with the previous year, wherein these 3 purposes accounted for 76% of the total IPO proceeds as compared to 72% in the current quarter.
To read this section in detail, download the pdf.
Knowledge Corner
ICDR Amendments
SEBI has come out with the amendments in SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“SEBI ICDR Regulations”) during the first half of March 2025, focusing on main board IPO, SME IPO, and rights issues. Some of the major amendments in main board IPO include:
