Companies looking to go public in FY27 are likely to pivot from debt repayment and high offer-for-sale (OFS) components towards increased greenfield capex in their fundraises, boosting fresh equity for factories, machinery and capacity expansion, multiple dealmakers told Mint.
“We anticipate 10-20% rise in capex allocation in DRHPs (draft red her prospectingus) for these sectors within Q1 FY27, as firms leverage tax credits and PLI extensions to justify higher valuations,” said Vipin Singhal, director at Anand Rathi Investment Banking. “This realignment will counter prior debt-heavy patterns.”
It’s been just over a week since finance minister Nirmala Sitharaman unveiled the budget. Already, IPO bankers are hunting mandates to ride the government’s capex wave, bankers said.
Though it is too early to identify specific companies and themes, investment banks may push companies to tweak “use of proceeds” even pre-filing. This can help companies better capture budgetary incentives and play the market sentiment, Singhal said.
Government spending is not directly linked to capex needs of IPO-bound companies, but it cascades through supply chains, boosting contractors, manufacturers, and suppliers. At 4.4% of GDP, this capex doubles down on ‘Viksit Bharat’, with new tax breaks for factories and wider PLI for chemicals and electronics parts.
There is some scope for companies to change the way they view IPO fundraises, another investment banker at a boutique firm said, on the condition of anonymity.
The ‘objects of the offer’ section of the prospectus will likely be scrutinized more heavily by institutional investors who will now seek “multiplier effects” rather than simply look at the balance sheet, the banker said.
“The market is no longer rewarding deleveraging stories with the same valuation multiples it did in 2024,” this person said. “The Budget has created clear fiscal incentives for companies to build things like new factories rather than just optimizing existing ones. You will now see more firms switch their fresh issue utility from ‘general corporate purposes’ to specific machinery procurement and factory automation to capture the new incentives.”
Leaning on exits
For the past two fiscal years, India’s IPO market has seen exit-heavy deals, where offer-for-sale components dominated and fresh issue proceedings were largely earmarked for deleveraging.
Since 2021, the share of capex and related costs like project expansion and real estate spending to the total IPO size has hovered around 20-25% each year, according to data from market intelligence firm Prime Database.
In 2025 alone, close to 20 startups, including Groww, Urban Company, PhysicsWallah and Lenskart, saw major stake sales in their IPOs, with marquee investors like Peak XV, Accel, Tiger Global and SoftBank seeking complete or partial exit opportunities.
In November last year, India’s chief economic adviser V. Anantha Nageswaran highlighted concern over IPOs becoming exit vehicles for early investors in a trend that was undermining the purpose of public markets.
But this trend is likely to change gradually, as qualified institutional buyers grow wary of secondary exits that allow private equity funds to realize gains without leaving capital for the company’s growth, the second banker quoted above said.
“An IPO that is 80% OFS is now a harder sell. Investors are increasingly calling for the capital to stay in the company to fund its next phase of growth, particularly in sectors like semiconductors and green hydrogen where the Budget has provided long-term policy certainty,” the banker added.
Around 60 companies are currently awaiting Sebi approval for their listings. This includes players in the pharmaceuticals, textiles, steel, transmission and other manufacturing-linked industries such as Symbiotec Pharmalab Ltd, Alpine Texworld, RK Steek Manufacturing Co., Casagrand Premier Builder Ltd, Kanohar Electricals Ltd., and Dhoot Transmission Ltd.
Investment bankers and market analysts expect a “mid-course correction” in some of these filings, with companies likely to increase their fresh issue sizes to take advantage of the newly announced investment allowances.
