IPO Market 2026: Valuations Drop Nearly 40% Amid Market Volatility And High Crude Prices

The average P/E multiple of companies entering the primary market declined from 69.46 times in 2025 to 41.69 times in 2026, according to IPO market data.

This change follows a period in which several new-age businesses commanded high valuations in 2025, driven by expectations of strong future earnings growth.

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Key points generated by AI, verified by newsroom

• Indian IPO market valuations decline 40% amid correction.
• Market volatility, crude prices, global uncertainty reduce investor appetite.
• Fundraising remains robust; however, pricing becomes more cautious.

Valuations in the Indian initial public offering (IPO) market are witnessing a sharp correction, with the average price-to-earnings (P/E) multiple declining nearly 40 per cent in 2026 compared with 2025. Despite robust fundraising activity, companies entering the stock market are being priced at lower earnings multiples amid volatile equity markets, rising crude oil prices and uncertainty over future returns.

The average P/E multiple of companies entering the primary market declined from 69.46 times in 2025 to 41.69 times in 2026, according to IPO market data. This change follows a period in which several new-age businesses commanded high valuations in 2025, driven by expectations of strong future earnings growth.

However, recent public offerings indicate a shift towards more measured pricing, with established businesses also entering the market at relatively lower valuations. The reported IPO valuation multiples highlight the differences in pricing across companies. Lenskart Solutions (NSE: LENSKART) had an IPO P/E multiple of 522.08 times, while Billionbrains Garage Ventures (NSE: GROWW) was valued at 81.3 times.

The National Stock Exchange of India had a reported multiple of 43 times, followed by SBI Funds Management (NSE: SBIFUNDS) at 42 times and Jio Platforms at 33 times. Jio Platforms' valuation multiple relates to its ongoing offering and not a completed listing. These differences reflect varying growth expectations and business characteristics.

High P/E multiples generally indicate that investors are anticipating substantial future earnings growth, while lower multiples may reflect more moderate growth expectations, established earnings profiles or other company-specific factors. Indian equities have faced pressure from geopolitical uncertainty, elevated crude oil prices and selling by foreign investors. These factors have reduced investors' appetite for paying substantial premiums for businesses whose earnings may take years to justify their valuations.

The changing composition of IPO issuers has also contributed to the shift. While technology-led and consumer businesses attracted considerable attention in 2025, several established businesses in financial services and infrastructure entered the public market in 2026. Existing shareholders seeking exits through offer for sale (OFS) transactions are also facing a challenging pricing environment. Meanwhile, India's IPO fundraising activity remains strong.

During the first half of FY27 (H1FY27), 78 companies raised approximately Rs 94,276 crore, highlighting continued access to primary-market capital despite tougher market conditions. The correction in IPO valuations does not mean that all newly listed stocks will underperform. However, high issue valuations can leave companies more vulnerable to selling pressure when earnings disappoint, growth slows or market sentiment weakens.

In March 2026, approximately 68 per cent of mainboard companies listed in FY26 were trading below their IPO issue prices. This indicated that strong subscription demand and listing-day enthusiasm did not necessarily translate into sustained returns for investors. Individual companies have experienced different listing outcomes.

Billionbrains Garage Ventures, for example, listed at Rs 112 against its issue price of Rs 100 in November 2025, delivering a listing gain of 12 per cent. However, a high initial valuation can leave limited room for earnings disappointments, slower growth or a change in market sentiment. Companies with stable earnings and stronger business fundamentals may be better positioned to retain investor interest during market corrections.

Regulatory flexibility could also influence upcoming fundraising plans. The Securities and Exchange Board of India (SEBI) has extended the relaxation allowing eligible issuers to revise fresh issue sizes by up to 50 per cent without filing fresh draft documents, subject to applicable conditions, until March 31, 2027. For upcoming IPOs, profitability, earnings visibility, debt levels and valuations relative to comparable listed companies are likely to remain important considerations.

Although India's primary market continues to attract capital, the sharp decline in average IPO P/E multiples reflects a significant change in pricing expectations. Strong demand alone may no longer justify premium valuations, particularly amid continued uncertainty in secondary-market conditions.

“Disclaimer: This article uses information originally published by Dalal Street Investment Journal (DSIJ). The views expressed are those of the original authors and not necessarily of ABP Network Pvt. Ltd. This content is provided for general informational and educational purposes only and should not be construed as investment, financial, legal or tax advice. Readers are advised to conduct their own research and/or consult a qualified financial advisor before making any investment decisions. This content is for informational purposes only and should not be treated as investment advice. ABP Network, its employees and associates shall not be responsible or liable for any losses or damages arising directly or indirectly from the use of or reliance on this article or any information contained herein.”