Indian IPO hit parade will continue in 2026 but avoid underwater deals!

The Indian equity markets have experienced one of Asia’s most frenetic IPO bonanzas in 2024-25 even if no less than 50% of all new flotations are now trading below their offer price. Despite the decline of the Indian rupee’s new low against the dollar beyond 91 and Dalal Street’s underperformance relative to my fave emerging markets Argentina, Poland and Brazil in 2025, the macro omens suggest that the IPO hit parade will continue in 2026 especially since it will be dominated by two mega deals Jio and NSE.

Kotak and Goldman estimate that Indian IPOs will raise $25 billion in 2026 but from an investor perspective, it will be a Clint Eastwood market since the deals will include the good, the bad and the ugly. Unlike the GCC, India offers global investors sheer scale and sector diversification as a $4 trillion GDP economy that just delivered 8.2% growth rate and hugely benefits from a collapse in crude oil prices. The secondary market still trades at a sharp premium to the Morgan Stanley EM index but the Nifty’s 21X multiple is even higher than its 19X five year average multiple.

However, I have always viewed India as a domestic growth stock since its fate is not hostage to exports or the fickle global business cycle but derives momentum from the massive flows into Dalal Street from its domestic mutual funds, life insurers and asset managers. A monthly bid of $5 billion from domestic institutions makes India far less dependent on hot money from abroad, though I noticed the rupee crisis correlated strongly with an exodus of $1.5 billion of foreign funds from the local stock market in December.

Two factors make me bullish about the prospects for Indian IPOs in 2026: One, the skepticism about AI capex and circular debt Ponzi schemes on Wall Street has taken a toll on the MAG-7 and boosted the hunt for non-correlated emerging markets in Asia with no heavy AI/chip concentration like South Korea and Taiwan. This will definitely be a positive ballast for foreign bids in brand name Indian flotations like Jio, NSE, Manipal Hospitals backed by Tamasek, PhonePe, Zepto and ICICI Prudential’s asset management business. Two, Indian earnings growth were a disaster at only 2% in 2025 but can rise as high as 15-16% next year while GST 2.0 and the Monsoon RBI rate cut were powerful stimuli to invest in the Nifty, ideally at a 24000 val metric for me. India is expensive but it has always been expensive though the val premium relative to Asian EM is now at 4-year lows.

Despite the spectacular performance in Shanghai/Hong Kong Red Chips last year, many mega US institutional investors prefer paying up for India than bearing the geopolitical risk and overnight policy U-turns of China ruled by the CCP Politburo. India will be third or fourth in the global IPO market league table in 2026 and hopefully Babu Raj in the financial markets will be diluted to facilitate the interests of global investors in Dalal Street. The pipeline now includes almost 180 companies who could go public in 2026.

With a crowded IPO pipeline, it becomes essential to separate the chicken salad from the chicken merde since they are both white. So it would be a mistake to bid for anything other than a world-class deal, given that more than 150 IPOs are now trading underwater from their listing price. Yet brand name alone does not guarantee that a deal will make money as any investors in the mega IPOs of Lulu and Talabat will attest. These were both billion dollar plus deals backed by stellar corporate brands but both lost 35-40% from their IPO offer price. I chose not to bid for the Lulu IPO and did not even read the Talabat prospectus but I never thought I would see Lulu trade at a mere 1.16 AED a share since it is a colossal, extremely well managed business founded by a brilliant billionaire from Kerala in the late 1970’s.

In India, foreign fund managers know all too well that regulators can be arbitrary in their decisions, local oligarchs excert huge political pressure, promoters frequently manipulate their own shares to the disadvantage of minority shareholders and bankers misprice new issues to fleece investors. The iffy relations between Trump White House and Modi government are also a dark cloud in an otherwise positive sentiment scenario though the delay in the trade deal is a matter of concern to the capital markets. My call, net-net, look before you leap and brace for a roller coaster ride on the stock exchange.