Companies looking to launch public offerings are generally opting to wait for more favorable market conditions rather than resizing their offerings, as valuation expectations continue to influence their decisions amid ongoing market volatility.
In April, the Securities and Exchange Board of India (SEBI) permitted companies to reduce initial public offering (IPO) sizes by up to 50% without needing to refile offer documents. This decision aimed to assist companies during a period marked by heightened market fluctuations and uncertain investor sentiment.
However, industry advisers note that the issue size remains one of the last aspects companies are willing to reevaluate. “Currently, we do not anticipate issuers to substantially alter their IPO size,” said Sourav Modi, Partner at JSA Advocates & Solicitors. He pointed out that the macroeconomic conditions, combined with differing valuation expectations between issuers and investors, complicate approaches to the IPO market.
According to Sahil Bora, Partner at JSR Capital Advisors, many promoter groups, private equity investors, and pre-IPO stakeholders are still basing their expectations on the strong market conditions observed between 2021 and early 2025. During that period, market liquidity was abundant, public market multiples were high, and IPO markets remained favorable.
The current market dynamics have shifted significantly. “For some PE and pre-IPO investors, accepting lower valuation multiples can significantly affect anticipated returns, especially when prior entry valuations were established during a more euphoric market phase,” stated Bora.
Consequently, many issuers are reassessing their launch plans instead of compromising on valuations unless limited alternatives exist due to market conditions. “Most companies would still prefer to wait for better market conditions rather than reduce issue size prematurely, as a visible cut can be interpreted as weak demand,” remarked Soumya Singh, Co-founding Partner at Thistle & Law.
A reduction in issue size may impact offer-for-sale proceeds, secondary sales, transaction economics, and set a lower public-market benchmark for future exits, Singh added. Instead, companies are focusing on various factors, including anchor investor demand, institutional feedback, valuation support, offer-for-sale quantum, pricing strategies, and timing before considering a revision of issue size.
In addition, SEBI has extended the validity of observation letters, which typically expire within 12 months, thus granting companies more time to access capital markets. Over 30 companies have delayed their IPO launches beyond the standard 12-month approval period.
The primary market has experienced a slowdown in mainboard launches over the past two months, with geopolitical tensions, global market volatility, and weakened investor sentiment affecting issuance plans. In some instances, investor-shareholder agreements may require exits to occur within specific timelines, while certain funds nearing the end of their investment cycles may seek liquidity despite prevailing market conditions.
Factors such as sector outlook and specific funding needs may also influence timing for potential IPO launches. The measures provided by SEBI offer issuers increased flexibility in planning their launches, particularly if market conditions remain volatile as execution approaches. With these relaxations valid until September, many companies are expected to closely monitor investor appetite, market sentiment, and the performance of upcoming public issues before finalizing their launch decisions.
Published on June 2, 2026.
