Indian IPO merchant bankers experience a standstill amid Trump’s tariff chaos. What’s the way ahead?

The initial public offering (IPO) market has struggled not only in India but also globally due to the turmoil caused by Trump’s tariffs. It's been over a month since any new IPOs have emerged in the Indian market, although there are numerous filings with the Securities and Exchange Board of India (SEBI). As per the IPO insights from Uniqus Consultech, SEBI has currently received around 144 draft offer documents, which together account for a planned issue size exceeding ₹1.47 lakh crores (around USD 17 billion).

Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities stated that the market volatility and global uncertainty due to Trump tariffs chaos is fueling pressure in primary market activities. Tepid secondary market performance from the last 3-4 months has eroded a lot of investors’ money and eventually reduced IPO appetite. Now Indian promoters as well as merchant bankers are facing a lot of hurdles to tap primary markets wherein promoters are in wait and watch mood for market recovery as investors getting more cautious and sellers rethinking valuations.

Way ahead promoters as well as merchant bankers will watch the secondary market very closely before testing the waters.

IPO

As reported by Bloomberg, on the global front, merchant bankers are assessing when US IPOs might bounce back following the setback caused by President Donald Trump’s tariffs, which have led to delays in deals.

Regarding the US IPO markets, Keith Canton, head of Americas equity capital markets at JPMorgan Chase & Co., mentioned in a Bloomberg report that there is a "sense of paralysis" among both companies and investors in the US. The ongoing processes are currently on hold for the short term; our advice to issuers is to stay prepared and we will reassess the situation on a weekly and daily basis, but we need to wait for stability to return first.

Mohit Gulati, the CIO and managing partner of ITI Growth Opportunities Fund, shared that the Trump tariffs have undoubtedly caused significant disruptions across global financial markets, including in India, the US, and other international economies. The volatility stems from heightened uncertainty, trade tensions, and fears of a global recession, with stock markets worldwide experiencing historic losses. However, despite this turbulence, the global economy has too much at stake to remain stagnant.

Indian IPO market so far in 2025

According to the Uniqus Consultech report, the IPO market in India witnessed diverse trends in the first quarter of 2025, with all IPOs in January entering the market at a premium, resulting in an average gain of 30% for investors. In contrast, February saw a significant change, where three out of the four companies listed at a price lower than their issue price. Hexaware Technologies, which made its comeback to the capital market, was the only firm that managed to list at a premium during this month. Despite the fluctuations, the average listing gains for the quarter remained positive at 17.53%.

What opportunities exists for merchant bankers?

Gulati, explained that this challenging period offers a unique opportunity for financial market participants to recalibrate their strategies. By focusing on understanding macroeconomic trends and aligning them with micro-level fundamentals, investors and merchant bankers can prepare for well-priced opportunities that will emerge when stability returns. The long-term structural growth stories of resilient economies like India remain intact, making this a time for strategic preparation rather than panic.

What's the way ahead?

Tapse explained that in the near term of 2-3 months, we may see similar flat activities in the primary markets. Let Q1FY26 earnings present the show and if there is some kind of stability in the topline as well as bottom line, which will give some confidence and visibility for markets to perform. Large IPOs like Ather, NSDL, JSW Cement and LG are eagerly waiting to raise funds from Indian markets.

Further, Arun Kejriwal, the founder of Kejriwal Research and Investment Services added that in the coming month, conditions may improve, and once the situation stabilizes, normalcy is expected to return, possibly at levels 10% higher or 15% lower; the exact level remains uncertain.

A return to normal does not imply a static or uncertain environment; when conditions improve, merchant bankers will likely adopt more rational pricing strategies, leading to new issues being launched and sold. Already, a month and a half has passed without any new issues, and with each day, it becomes evident that two or three issues emerge, although they do not attract significant investor interest.

The primary market cannot recover without a standout IPO, and a standout IPO is understood as being valued fairly at 10-20% less than what investors are willing to accept. So, who will take the initiative to drive this forward?

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.