2025 has just started, and we have already witnessed around six IPOs in January. Four were in the mainboard category, while two were in the SME category. This suggests the upcoming IPO season can be as complete as in 2024.
Companies are going public with the rising need for funds, debt reduction, and business growth. Indeed, the atmosphere for flourishing start-ups has led to their business growth aspirations.
So, it is time to move your attention towards the upcoming IPOs.
But where should you focus your attention?
Which sectors are the most buzzing ones and attracting investor interest?
Here is an in-depth blog exploring the upcoming 2025 IPO trends. It will provide you with valuable insights to navigate this dynamic landscape.
The IPO Trends In 2024: A Recap
As discussed earlier, 2024 witnessed significant IPO announcements taken into account. So, let us have a quick recap on the major 2024 trends.
2024 saw a cautious approach from businesses or companies considering going public. Several factors contributed to this hesitancy.
These were as follows:
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Global Economic Uncertainty
Heightened geo-political tensions marked the year 2024. These geopolitical uncertainties had a contagion effect on stock markets worldwide, including Indian stocks and IPOs.
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Market Volatility
While the market seemed to flourish until the third quarter of the calendar year, it experienced several uncertainties during the final quarter that have continued to haunt FIIs (Foreign Institutional Investors) and retail investors.
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Increased Regulatory Scrutiny
The aspect of regulatory scrutiny was reinforced in 2024. A few companies noted this, particularly in the tech sector, and consequently paused their IPO decisions.
Despite these difficulties, the year 2024 witnessed some notable IPO successes. The renewable energy and healthcare sectors made their mark. Companies with a clear path to profitability still managed to attract investor interest and achieve successful IPO listings and listing gains.
2025: The Year That Started With The Launch Of Six IPOs
If you open demat account and look for IPOs, you will notice that from the beginning, 2025 has injected the share market with renewed optimism into the IPO market. With six IPOs launched in the first month, the year promises a more active IPO landscape than its predecessor.
Several significant trends are emerging in the IPO space. These are as follows:
- The tech sector, which experienced a slowdown in 2024, shows signs of a comeback. Several high-profile tech companies are rumoured to be considering IPOs in 2025, driven by advancements in artificial intelligence, cloud computing, and cybersecurity.
- The renewable energy sector is expected to maintain its strong momentum from 2024. Growing concerns about climate change and government incentives drive increased investment in solar, wind, and other renewable energy sources, leading to a surge of upcoming IPOs in this space.
- The healthcare sector might continue to attract investor interest. Advancements in biotechnology, pharmaceuticals, and medical devices can fuel this. The recent HMPV fear might also impact the sector. So, the companies developing innovative treatments and therapies might be particularly well-positioned for successful IPOs in 2025.
- The e-commerce and fintech sectors might also significantly impact the IPO market. Companies leveraging that lever to disrupt traditional retail and financial services might attract investor attention, leading to a pipeline of upcoming IPOs in these sectors.
Here is a closer look at some specific sectors gaining attention in the 2025 IPO market:
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Artificial Intelligence (AI)
Companies developing AI-powered solutions for various industries, including healthcare, finance, and manufacturing, are constantly in the news and attracting significant investor interest. Therefore, one can expect upcoming IPOs from AI companies with innovative applications and strong growth potential.
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Electric Vehicles (EVs)
The world is going green towards green energy. The EV market has continued to expand rapidly. Most of it is driven by government regulations and consumer demand for sustainable transportation. We may see IPOs of EV manufacturing, battery technology, and charging infrastructure in 2025.
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Biotechnology
The year has just started, and we are flooded with HMPV news. Thus, 2025 might be a breakthrough year for biotechnology. Biotech companies developing breakthrough therapies for Cancer, Alzheimer’s, and genetic disorders might attract significant investment. Therefore, you can expect upcoming IPOs from companies with promising clinical trial results and a strong pipeline of drug candidates.
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Cybersecurity
Danger! Your data is under threat. Have you heard or read this before? Yes, with the increasing frequency and sophistication of cyberattacks, cybersecurity companies seem in high demand. Therefore, companies offering innovative solutions to protect data and prevent cyber threats will likely consider IPO issuing in 2025.
What You Should Be Careful About While Investing in IPOs
Investing in upcoming IPOs is an exciting investment opportunity. However, it is crucial to approach them with caution and conduct thorough due diligence.
Here are some of the significant factors that you might want to consider:
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Company Fundamentals
You should not get swept up in the IPO hype. You must carefully analyse the company’s financial performance, management team, competitive landscape, and growth prospects. You can look for companies with a solid track record, a transparent business model, and a sustainable competitive advantage.
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Business Valuation
You must assess whether the IPO valuation is justified based on the company’s fundamentals and future growth potential. It is essential to avoid overvalued IPOs. This is because they might experience a significant price correction after listing.
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Market Conditions
Investors must consider overall market conditions and investor sentiment before subscribing to an IPO. In volatile markets, IPOs might be particularly risky. They might be riskier than investing in listed stocks in the stock market.
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Lock-Up Periods
You need to be aware of lock-up periods. These lock-up periods restrict insiders and early investors from selling their shares for a specific period after the IPO. The expiration of lock-up periods might sometimes lead to increased selling pressure and price volatility.
IPO Investing Risks
Investing in upcoming IPOs carries inherent risks. Some of the significant risks to be aware of are as follows:
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Pricing Uncertainty
IPO pricing can be unpredictable. The initial trading price may differ significantly from the IPO price. Thus, you might experience losses, especially if the stock price declines after listing.
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Short Term Volatility
Stock price volatility might pour cold water on your listing gain dreams. Newly listed stocks can be highly volatile. There might be significant price swings in the early days of trading. This volatility can make it challenging to time your entry and exit points.
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Limited Historical Data
Unlike established companies, newly public companies have limited historical data, making assessing their long-term performance and financial stability harder.
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Information Asymmetry
Insiders and institutional investors often have access to more information than retail investors, which can create an information asymmetry and put retail investors at a disadvantage.
Conclusion
The 2025 IPO market is poised for an exciting year, with a diverse range of companies across various sectors preparing to go public. Technology, renewable energy, healthcare, e-commerce, and fintech might be among the top sectors attracting considerable investor attention.
However, it is crucial to approach upcoming IPOs with a cautious and informed perspective. It is essential to conduct thorough research, analyse company fundamentals, assess valuations, and be aware of the inherent risks associated with IPO investing. You can navigate the IPO market effectively and potentially capitalise on its opportunities by staying informed and making well-considered decisions.