Indian IPOs Face Deadline as Regulatory Approvals Loom

India's IPO Market at Risk as Companies Hold Back Listings

A wave of initial public offerings (IPOs) in India is facing uncertainty, with several approvals nearing expiry due to a downturn in the equities market. This caution is forcing prominent companies to reassess their plans for listing, as market sentiment remains fragile.

Among the companies at risk are EQT AB-backed education loan provider Credila Financial Services, which has been planning to raise about 50 billion rupees ($536 million), and Dorf-Ketal Chemicals India Ltd., which has been attempting to sell shares for nearly a year. Other prospective issuers include non-bank lenders Hero FinCorp Ltd. and Veritas Finance Ltd.

If market sentiment fails to improve in the coming weeks, these companies may be forced to refile their draft prospectuses with the Securities and Exchange Board of India (SEBI) and restart the approval process. This would add to the signs of weakness in India's IPO market, which has seen two record years for proceeds.

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Market participants point to valuation mismatches and weak secondary market performance as key factors behind the delays. The current market conditions, including ongoing geopolitical tensions, elevated crude prices, and a weakening rupee, are also contributing to the uncertainty.

According to market experts, the current environment is not conducive for companies to launch IPOs. DAM Capital Advisors Ltd. CEO Dharmesh Mehta notes that the market sentiment remains fragile, and companies may prefer to wait for greater stability in global and domestic markets before tapping investors.

The valuation concerns are also evident in the performance of listed IPOs. Out of the 18 mainboard IPOs listed so far this year, about 12 are currently trading below their offer prices. Specifically:

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Seven of these IPOs have declined by as much as 11% to 35%. This trend highlights the challenges faced by companies looking to list their shares in the current market conditions.