Kotak Investment Banking Estimates 32% Increase in IPOs to Rs 2.50 Lakh Crore This Year

Kotak Investment Banking (KIB) anticipates a 32% increase in initial public offerings (IPOs) this year, reaching Rs 2.50 lakh crore. This growth is driven by a surge in large issuances exceeding USD 1 billion. In 2025, the Indian market saw a 13% rise in IPOs, totalling Rs 1.89 lakh crore, despite an 18% decline in overall equity capital markets (ECM) activity to Rs 5.1 lakh crore.

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Concerns have emerged regarding the nature of IPOs in 2025, with nearly two-thirds being offer-for-sale by existing investors and minimal fresh issuances for investments. KIB believes domestic institutional investors will remain crucial, as they accounted for 60% of IPO anchorbooks in 2025. The year also witnessed block deals worth Rs 2.1 lakh crore, with multinational companies responsible for 38% of sell-downs.

IPO Growth and Market Dynamics

A third of the IPOs this year are expected to be over USD 1 billion. New-age and consumer sector companies are likely to continue leading the market. KIB's managing director, V Jayasankar, noted that valuations in India have decreased, bringing multiples closer to the ten-year average, which could attract more investors.

Qualified Institutional Placement (QIP) issuances are projected to increase slightly to USD 10-12 billion in 2026 from USD 10 billion in 2025. This modest rise reflects a stable interest from institutional investors despite previous concerns about IPO structures.

Merger and Acquisition Outlook

KIB anticipates foreign investors will inject more capital into assets acquired earlier as companies aim to diversify and expand their offerings. This trend highlights the ongoing interest of international players in the Indian market, seeking opportunities for growth and diversification.

The entity remains optimistic about domestic institutional investors' role in supporting the market's stability and growth. Their significant participation in IPO anchorbooks underscores their importance in shaping market dynamics.

The outlook for IPOs and ECM activities suggests a promising year ahead, with large issuances and strategic investments driving growth. As valuations align with historical averages, investor interest is expected to strengthen further.

With inputs from PTI