India’s initial public offering market is experiencing an unprecedented surge, driven largely by domestic investors, according to data compiled by Bloomberg. LG Electronics India Ltd.’s $1.3 billion IPO on October 7 sold out in just six-and-a-half hours, marking the fastest take-up among major Indian IPOs in 17 years. The listing, the third-largest in India this year, highlights the growing clout of local mutual funds, insurers, and retail investors in a market once dominated by foreign capital.
The IPO frenzy is part of a broader wave in which India is on track to approach last year’s record $21 billion in total IPO proceeds. Analysts note that domestic investors now account for nearly 75% of all investments in Indian IPOs in 2025, according to Prime Database, dwarfing the 25% share contributed by foreign funds. “The market is going through a sea change,” said Abhinav Bharti, head of India equity capital markets at JPMorgan Chase & Co., noting that households are increasingly channeling savings into equities via mutual funds.
LG’s IPO, which saw $200 million of shares taken up per hour, attracted 60% of bids from local investors. The stock surged 48% on debut, underscoring both strong investor demand and the market’s robust appetite for new offerings. Among IPOs raising at least 100 billion rupees, LG’s sale was the fastest since Reliance Power Ltd.’s 2008 listing, Bloomberg data show.
The influx of domestic capital is reshaping India’s equity landscape. Retail investing, spurred by mobile trading apps and social media education, has fueled an expansion of mutual fund and insurance firm holdings. Domestic institutional investors now hold 19.2% of shares in over 2,000 companies on the National Stock Exchange of India Ltd., the highest in 25 years, while foreign holdings have dropped to 17.3%. This shift has helped the market deliver a weighted average return of 18% on IPOs this year, despite $16 billion in foreign outflows.
The strong appetite for shares is encouraging companies to seek IPOs as a preferred fundraising route. Bloomberg reports that more than 300 listings have raised nearly $16 billion so far in 2025, with large upcoming deals expected from Reliance Jio Infocomm Ltd., Flipkart India Pvt., and Walmart-backed PhonePe Ltd. Bankers and investment professionals are working long hours to accommodate the IPO pipeline, with 80 firms approved by regulators and another 121 having filed applications.
However, experts caution that lofty valuations and extreme oversubscription rates for smaller IPOs may pose risks for retail investors. Axis Capital’s Pratik Loonker noted that mispriced large listings could “spoil the party” even amid otherwise robust market conditions. Data compiled by Bloomberg also show that nearly half of smaller listings in 2025 are trading below their issue price, indicating pockets of volatility in the otherwise booming market.
Despite these risks, the outlook for India’s IPO scene remains strong. Morgan Stanley’s Saurabh Dinakar likened the current environment to China’s market a decade ago, citing a growing middle class, rising internet penetration, and favorable regulatory reforms as key drivers. With more than 90 private firms valued above $1 billion, India now ranks as the world’s third-largest unicorn hub, following the U.S. and China, Bloomberg data show. As the breadth of IPOs expands into fintech, renewables, and other sunrise sectors, analysts expect domestic demand to remain a stabilizing force for years to come.
