IPO valuations dip in India as local funds flex pricing muscle
The median price-to-book ratio for IPOs that raised at least ₹1,000 crore has dropped to 7.4 times in 2026, compared to 10.2 times last year, according to data from fintech platform Chittorgarh
Indian domestic funds are aggressively negotiating for lower IPO valuations, exerting their pricing power even for the largest deals as the broader market faces challenges. The median price-to-book ratio for IPOs raising at least ₹1,000 crore ($104 million) fell to 7.4 times in 2026, down from 10.2 times in the previous year, according to Chittorgarh's data, a significant shift despite accounting for financial sector distortions.
Only two loss-making companies were part of this group compared to at least five in 2025 and 2024. Amidst pressures from the Iran war, global trade tensions, and AI sector uncertainty, local money managers are gaining control over deal terms, forcing companies to accept cheaper entry points or cancel IPOs altogether. Ritesh Taksali, chief investment officer at Edelweiss Life Insurance, notes that companies were previously reluctant to adjust pricing, but now offer better discounts.
Domestic institutions' share of proceeds from first-time share sales has risen to 33% this year from 24% in 2021. Notable listings, such as the National Stock Exchange of India's IPO, have been downsized by about 15%. Zepto Pvt. and Prestige Estates Projects Ltd. halted their offerings in August and last week, respectively. While fund managers acknowledge that pricing can be frothy, the evolving market dynamics are making investors more discerning.
Gaurav Misra, head of equities at Mirae Asset Mutual Fund, mentions a "persistently reasonable amount of time spent on analyzing and tracking new firms." Major players, like NSE, are adjusting listing sizes based on investor willingness to pay.
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