What does Ather’s listing mean for IPOs? Can the Indian capital market regain its mojo?

Electric two-wheeler maker Ather Energy Ltd, India’s first major initial public offering (IPO) in the current financial year (FY26), witnessed a subdued debut in the Indian stock market on May 06. The company’s shares were listed at just a 2 per cent premium over their issue price of ₹321 ($3.80).

The Bengaluru-based company, which decided to proceed with its $352 million IPO despite the uncertainty, had to cut its target valuation by 44 per cent and lower its offer size, though its IPO was fully subscribed.

Ather Energy listed its shares on the National Stock Exchange (NSE) and BSE following a moderately subscribed IPO. The shares listed at a 2 per cent premium over the IPO price failed to build on the early gains. Shares of Ather Energy fell almost 6 per cent from the listing price on May 06. Despite strong brand recognition and solid technological strengths, the company is still struggling with profitability, reporting a significant net loss in FY24.

Reuters reported that at least two IPOs worth $759 million are also expected to be delayed, adding to a growing list of companies that are deciding to postpone plans for market listings due to weak investment sentiment. Education loan provider Avanse Financial Services and contract drug maker Anthem Biosciences are among companies that will join notable names such as South Korean company LG Electronics' India unit to put IPO plans on hold for now.

As many as 58 companies have not launched their IPOs even after obtaining the regulatory clearance due to global market disruptions caused by U.S. President Donald Trump's tariffs, which have negatively affected business sentiment and fuelled recession fears.

India, which was the world's second-largest IPO market last year, has seen a 58 per cent slump in IPOs listed on the main stock exchanges so far this year, according to Prime Database. The total fundraising on all the listing platforms has seen an 18 per cent drop, LSEG data showed.

Retail investors, having suffered significant losses due to market volatility, are being more cautious with new investments, resulting in a lukewarm reception for this year's IPOs.

In 2024, over 90 companies collectively raised an impressive ₹1.62 lakh crore, two times more than the ₹49,436 crore raised in 2023. This staggering achievement was headlined by Hyundai Motors India's ₹27,870 crore IPO, which not only eclipsed all other IPOs of the year but also claimed the title of the largest IPO in India’s history, surpassing LIC's ₹20,557 crore IPO in 2022.

Big names like LG India (valued at $15 billion), Flipkart ($36 billion), and Reliance Jio (valued at over $100 billion) were preparing to enter the primary markets this year, but geopolitical uncertainty, US tariffs and weak investor sentiment have not allowed India’s IPO market to sustain its momentum in 2025 so far.

According to the Q1 2025 IPO Trends Report by EY, India’s IPO market continues to demonstrate resilience, securing a 22% share of global IPO activity in the first quarter of 2025. With 62 IPOs raising a total of$ 2.8 billion, India remains a leading destination for companies seeking to go public, even amidst a backdrop of global market uncertainties.

Prashant Singhal, Partner - IPO and Markets Leader, EY India, stated, "While the impressive IPO proceeds in Q1 2025 (January to March) highlight the strength of India's capital markets, the record-breaking mergers and acquisitions (M&A) market further demonstrates its maturity. Q1 2025 saw all-time high M&A deal volumes with transactions valued at billions of dollars, reflecting strong investor confidence and strategic investments. This M&A surge, driven by domestic activity and international interest, complements the IPO market, showcasing a healthy and dynamic Indian financial landscape. We anticipate continued momentum in both public and private markets as companies pursue growth."