India's stock market is seeing a vibrant Initial Public Offering (IPO) frenzy. Till the start of December 2025, the total amount raised by companies through various listings on the mainboard and SME has been approximately ₹1,71,731.6 crores, which is a clear indication of the enthusiasm of the promoters as well as the investors.
Nevertheless, a subscription to an IPO should not be considered as supporting the future expansion of a business without investors doing a thorough check-up of the destination of the funds.
Fresh Issue vs. Offer for Sale: Why the Split Matters
A considerable amount of the various capital raised this year has not gone towards the expansion of the company. A large part of the Offer for Sale (OFS) accounts have, therefore, been promoters and early shareholders simply selling their existing stakes.
As per the latest figures, 34.1% of the IPO funds in 2025 have been raised through OFS.
So, a large part of the investor capital is not going into the business but is directly flowing into the pockets of the existing investors who are cashing out.
For retail investors, a high OFS ratio can be a source of doubt as to whether the company would continue to grow after the listing.
Where the IPO Money Is Being Deployed
Even when the company obtains a new issue of capital, the allocation is not always purely focused on aggressive scaling. As per the usage trends of the current quarters, the figures are as follows:
- - 28.8% of the proceeds are accounted for debt repayment
- - 25.9% have been invested in capital expenditure.
Reduction of debt makes the balance sheets stronger, but it is not a very clear signal of revenue growth going forward. Investors should be able to differentiate a financial cleanup that is necessary from the absence of a growth roadmap.
Performance After Listing: Not All IPOs Deliver Gains
Though there have been robust subscription levels for several issues, the performance after the listing has been volatile in 2025. To be precise, of the 93 IPOs that have been launched until now this year, merely 3 have turned into multibaggers, and only 7 have yielded a profit of over 50%.
It points to a very significant fact: an exuberant IPO market is not a surety of good long-term returns.
What Retail Investors Should Check Before Applying
With the market showing mixed results, it is very important for investors to take a deep dive into the company fundamentals rather than just following the headlines about subscription trends. Some of the main things that investors should focus on are:
- What portion of the fresh issue is new versus OFS
- “Use of proceeds” section: how clear and trustworthy it is
- The price in relation to the earnings and the future potential
- The debt position before and after the IPO
- The promoter commitment and shareholding trends
An organization that needs money for the growth of its business, development of new products, upgrading its technology or entry into the market, is definitely a better option for investors in terms of sustainable growth than an organization which is mainly making repayments or allowing investor exits.
Evidence of Quality Still Attracting Investors
While caution cannot be ruled out, the market continues to be receptive to companies that have sound fundamentals. The public listing of Meesho, which fetched $604 million, was an absolute success as it was completed on the very first day owing to the high demand from the retail side and the expectation of growth.
It is evidenced here that a company can attract the trust of investors when it puts forward a viable business model and a clear route to scaling.
Final Thoughts
The rapid increase in IPOs in 2025 is a sign that people believe in the future of the Indian economy. However, it also shows that quite a few firms are coming to the market mainly to change their financial structure and provide exits instead of going forward with their growth plans. Investors need to scrutinize the situation beyond the hype and figure out the efficiency of the capital usage.
Before applying to any IPO, the essential question remains:
Is this investment supporting the company’s future growth, or simply helping insiders reduce their stake?
Careful selection based on fundamentals, business use of proceeds, and valuation discipline will remain the most reliable approach in this year’s IPO-heavy environment.