Mahavir Lunawat says deeper domestic capital, rising institutional and retail participation, and higher corporate capital needs are driving a durable IPO cycle — but large offers will challenge how capital is allocated and force valuation scrutiny.
The current IPO momentum is structural, supported by deeper domestic liquidity, stronger institutional participation, and growing retail acceptance of equities.
Mega IPOs will test market depth because institutional funds have allocation, concentration and liquidity limits that can concentrate demand into a few large issuances.
# What Lunawat says about the IPO boom
# Why this phase looks structural Lunawat points to rising capital formation as part of the backdrop: gross fixed capital formation reached 34.3% of GDP in Q1 of FY27, and private-sector investment is accelerating. As India pursues larger economic ambitions, he argues the financial system must scale to meet corporate funding needs. That, in turn, is pushing companies across sectors and maturity stages to consider public markets for long-term capital and for promoters to unlock value.
# The challenge of mega IPOs Large listings, such as platform-scale companies, will test how efficiently India's capital markets allocate liquidity. Institutional investors typically work inside portfolio rules that set limits on concentration, liquidity and market-cap exposure. Even a small percentage allocation to a very large company can translate into a significant absolute investment, which may crowd out incremental institutional demand for smaller and mid-cap IPOs during subscription periods.
# Valuation and price discovery remain decisive Lunawat emphasizes that a large supply pipeline does not mean every company can raise funds at any valuation. The market's price-discovery mechanism will favor companies with strong fundamentals, credible management, sustainable growth and sensible valuations. Companies with weaker propositions will need to lower valuations or postpone listings.
# How this affects different issuers Large, well-known issuers may absorb a disproportionate share of institutional liquidity when they come to market. Smaller issuers can still find investors, but allocation constraints and liquidity considerations mean funds cannot replicate large allocations across many small issues. That will make valuation and proposition quality critical for mid- and small-cap listings.
# The broader capital-market picture Lunawat frames the IPO trend as part of India's need to deepen equity capitalisation and reduce over-reliance on leverage as the economy grows. He quantifies the scale required by suggesting India should be raising at least Rs 4 lakh crore through IPOs annually as the country moves toward a $10 trillion economy by 2030. The emphasis is on expanding both the supply of investible companies and the depth of domestic capital.
# Bottom line for investors and issuers
Somaiyaa said: "some really valuable businesses and some really valuable sectors have come into the market" over the past few years, including the entire electronic manufacturing and hospitals.
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