Tempered Enthusiasm: The Evolving Dynamics of India's 2025 IPO Landscape

By IndraStra Business News Desk

India's primary market has experienced notable expansion in 2025, with public offerings contributing to a broader pattern of capital mobilization that inspires confidence in the country's growth prospects. Data from market observers show that the country facilitated listings across diverse sectors, including technology platforms, consumer services, and educational enterprises. These offerings together accounted for more than $32 billion in public-market value through key debuts such as those of Groww, Lenskart, PhysicsWallah, Urban Company, and Ather Energy. This activity marks a continuation of the momentum observed since 2020, during which issuers raised approximately ₹5,394 lakh crore, positioning India as a prominent global participant in initial public offerings (IPOs). Fifteen such events in 2025 alone generated ₹33,573 crore, surpassing the previous year's total. These offerings involved companies of varied sizes, ranging from established firms to newer digital entrants. This surge aligns with a maturing ecosystem in which venture-backed entities transition to public scrutiny. Yet, the performance of individual listings reveals nuances in how investors engage with these opportunities, highlighting the ongoing potential for market development.
Within this framework, the debuts of Lenskart Solutions and PhysicsWallah exemplify the varied trajectories that characterize the year's offerings. Lenskart, a dominant player in organized eyewear retail, concluded its IPO on November 10, 2025, after an issue priced at ₹402 per share that attracted substantial interest during the subscription phase. The offering achieved overall oversubscription by a factor of 28, with qualified institutional buyers committing 45 times their allocated portion and retail investors participating at levels exceeding 20 times their allocated portion. Despite this enthusiasm, the stock opened at ₹390 on the Bombay Stock Exchange and ₹395 on the National Stock Exchange, representing discounts of approximately 3% from the issue price. Trading volumes reflected initial volatility, with the share price dipping as much as 11% below the opening level early in the session before stabilizing somewhat. By the close of the first day, the market capitalization hovered around ₹70,000 crore, representing a stable end to the session without implying broader outcomes for subsequent listings.
Lenskart's financial profile provides context for this reception. For the fiscal year ending March 2025, the company reported revenue of ₹6,652 crore, a 32.5% increase from the prior year, driven by its omnichannel strategy that blends physical stores with digital sales channels and international ventures. Profitability stood at ₹297 crore, though this figure included a one-time gain of ₹167 crore from an acquisition, leaving normalized net income closer to ₹130 crore and margins below 2%. EBITDA margins reached 14.7%, with projections for a 20% compound annual growth rate in topline through fiscal 2028. However, metrics such as an enterprise value-to-sales multiple of 10.1 times for fiscal 2025 and an implied 55 times enterprise value-to-EBITDA for fiscal 2028 highlight valuation challenges that require careful assessment. Thin free cash flows and a capital expenditure-intensive model further contribute to market caution, emphasizing the need for transparency and prudent valuation to maintain investor trust. 
In contrast, PhysicsWallah's entry into the market eight days later presented a more dynamic initial picture, though not without subsequent adjustments. The edtech platform, known for its affordable online coaching in competitive exam preparation, priced its offering at ₹109 per share and listed on November 18, 2025, at a 33% premium. Shares climbed as high as 48.6% above the issue price during the session, closing 44% higher at ₹155 and elevating the company's valuation to $5.2 billion. This performance ranked second among new-age listings in 2025, trailing only select peers and outperforming contemporaries such as Pine Labs and Groww on debut day. The stock's appeal stemmed from robust revenue growth, with fiscal 2025 figures reaching ₹2,890 crore, a 49% rise from the previous year, alongside a user base expansion that reinforced its position in a sector recovering from pandemic-era disruptions. 
Yet this early ascent proved fleeting. By the following trading day, November 19, the shares declined 9.29% to ₹140.63, amid broader profit-taking across recent listings. Further pressure materialized over the ensuing week, with a 15.6% drop from the debut close, aligning PhysicsWallah with a pattern observed in other high-profile entries where initial gains dissipated under selling from early allocants. Such movements underscore a market environment in which enthusiasm for growth narratives is tempered by scrutiny of profitability and macroeconomic headwinds.
These instances of Lenskart's restrained commencement and PhysicsWallah's transient elevation, followed by retraction, occur against a backdrop of tempered investor participation. Retail allottees, once avid pursuers of listing pops, now exhibit restraint, with average subscription rates for their quotas falling to 26.99 times in 2025 from 33.71 times the year prior. Listing gains averaged 8.41%, a sharp retreat from 29% in 2024, while nearly 60% of recent debuts yielded minimal returns or opened at discounts. Over the past 21 months, more than half of the offerings trade below their issue prices, with average post-listing returns, excluding debut-day gains, at a modest 4%. This shift manifests in a preference for smaller, niche propositions over large-scale new-age issuances, as institutional heavyweights and foreign portfolio investors, who sold $20 billion in Indian equities this year, exert downward pressure through post-allotment divestments. 
Broader market conditions amplify this caution. The Nifty 50 index advanced only 6% through the first nine months of 2025, while small- and mid-cap benchmarks were in negative territory, contrasting with the vibrancy of primary issuances that raised $11.5 billion from 79 companies, with projections for an additional $10-11 billion by December. Foreign investor disengagement from initial offerings, coupled with global factors such as potential U.S. tariff escalations, contributes to a selective posture among domestic participants. Experts from institutions such as Kotak Mahindra Bank and JPMorgan describe this as evidence of ecosystem maturation, enabling annual fundraising of more than $20 billion. Yet, they emphasize the need for vigilance, given that only 43 of the year's 79 IPOs have posted positive returns year to date. Voices from WealthMills Securities point to a pivot from hype-fueled allocations toward evaluations grounded in sustainable metrics, a development that, while fostering depth, introduces volatility for issuers reliant on narrative-driven pricing. 
At the heart of these dynamics lies a fundamental tension between aspirational valuations and operational realities, particularly pronounced in technology-enabled ventures. New-age companies like Lenskart and PhysicsWallah command multiples that embed aggressive growth assumptions—Lenskart's 10.1 times enterprise value-to-sales for fiscal 2025 exceeds sector norms, while PhysicsWallah's debut implied a premium reflective of edtech rebound potential rather than immediate earnings power. Such pricing, often calibrated during private rounds amid abundant liquidity, is subject to public-market discipline that prioritizes cash generation and return profiles. Lenskart's return on capital employed languishes at around 9%, below peers, and its free cash flows remain constrained by expansion outlays, mirroring challenges in PhysicsWallah's sector where revenue acceleration outpaces margin stabilization. This disconnect manifests in post-listing corrections, as seen in the 38% of 2025 IPOs trading below issue prices and the 27% debuting at discounts, eroding the allure of quick flips and compelling a reevaluation of risk-reward balances.
The prevalence of this valuation-operational mismatch constitutes the central challenge in India's current IPO cycle. It stems from a historical bias toward scale and user acquisition in venture financing, which imperfectly translates into equity markets that demand demonstrable paths to profitability. In 2025, while the pipeline diversified into infrastructure and financial services, technology and consumer platforms dominated, inheriting private-market exuberance that public investors now contest. This friction not only dampens debut premiums but also prolongs adjustment periods, as evidenced by the profit-taking that halved PhysicsWallah's gains within days and confined Lenskart to lateral trading ranges. Moreover, it constrains the emergence of enduring large-cap entities; despite $32 billion in unlocked value, no venture-originated firm has approached $100 billion in enterprise scale, limited by an ecosystem that favors consumer-facing models over those that require sustained research investments in areas like artificial intelligence or advanced manufacturing.
Addressing this requires measures that bridge private and public valuation paradigms without compromising oversight. One viable path forward involves refinements to regulatory frameworks that enhance liquidity and alignment post-listing. The Securities and Exchange Board of India (SEBI), in its November 2025 consultation paper on the Issue of Capital and Disclosure Requirements Regulations, 2018, proposes an amendment to Regulation 17 concerning lock-in periods for pre-IPO shareholders. Under existing rules, non-promoter holdings are subject to a six-month restriction on allotment to deter immediate sales and promote long-term orientation. However, operational hurdles—such as limitations in depository systems for tagging pledged or fragmented shares—frequently delay compliance, extending listing timelines and frustrating investor exits.
The suggested proviso mandates that depositories, upon issuer instructions, designate such securities as "non-transferable" for the lock-in duration, obviating the need for formal tags and distributing responsibilities: issuers amend governance documents and notify stakeholders, while depositories enforce the status. This adjustment preserves the protective intent—preventing speculative floods—while alleviating procedural bottlenecks, particularly acute in deals with complex pre-issue capital structures. In 2025, pre-IPO placements doubled to ₹716 crore across nine issuers, underscoring the mechanism's relevance amid surging activity. Implementation could expedite listings by weeks, instilling confidence in pre-IPO allocants who might otherwise demand steeper discounts for perceived illiquidity risks.
For issuers like Lenskart and PhysicsWallah, this change would facilitate smoother transitions, allowing early stakeholders to demonstrate commitment through enforced holds without derailing market access. Investors benefit from more precise exit planning, potentially stabilizing secondary trading by reducing forced sales upon lock-in expiry. Broader market effects include bolstered efficiency in a pipeline projected to sustain $20 billion annually, encouraging diverse sector participation and mitigating the valuation chasm through predictable capital flows. SEBI's emphasis on ease of business, evident in this targeted tweak, aligns with global trends where streamlined norms correlate with sustained issuance volumes, as seen in mature markets like the United States.
Beyond regulatory adaptation, market participants are responsible for adjusting their expectations. Issuers must integrate public-market precedents into pricing dialogues, favoring metrics like return on invested capital alongside growth trajectories. Lenskart's path to 20% revenue compounding, if paired with margin expansion to peer levels, could justify its premium over time; similarly, PhysicsWallah's user retention in edtech's competitive arena demands visibility into unit economics. Investors, in turn, gain diversified exposure, blending new-age bets with traditional sectors that accounted for 40% of 2025's fundraising. Educational initiatives from exchanges, emphasizing post-listing volatility, may further equip retail bases, whose participation dipped amid fading gains.
This combination of cases and trends shows a primary market undergoing change, with rising issuance volumes occurring alongside more selective capital allocation. Lenskart's steady integration and PhysicsWallah's adjusted valuation trajectory, viewed alongside the year's $20 billion-plus mobilization, affirm resilience yet invite introspection on sustainability. As global uncertainties persist—U.S. policy shifts, inflationary pressures—the domestic arena's capacity to channel funds into productive enterprises hinges on resolving the valuation-fundamentals divide. SEBI's lock-in proposal represents a pragmatic step that fosters liquidity without eroding safeguards and sets a precedent for iterative enhancements. In this measured evolution, India's IPO narrative advances not through unchecked volume but via equilibrated mechanisms that serve issuers, investors, and the economy alike.

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