The Securities and Exchange Board of India (Sebi) has extended its relief allowing companies to change their IPO issue size without additional compliance requirements until March 31, 2027, according to a letter from the market regulator to the Association of Investment Bankers of India (AIBI) seen by Mint. The earlier relaxation, initially introduced during the West Asia conflict and expired on September 30, has now been extended by six months. As reported by The Economic Times, the extension allows companies to negotiate market volatility without having to incur inflated compliance costs related to a listing. The extension applies to IPOs opening on or before March 31, 2027, with the relaxation being available for draft red herring prospectuses (DRHPs) filed until September 30, 2026. The extension provides companies with additional flexibility to adjust fundraising plans amid changing market conditions, allowing them to reassess their capital requirements without restarting the regulatory filing process.
The September quarter witnessed robust IPO activity with ₹94,649 crore raised through 161 offerings, according to AIBI data. Mainboard IPOs raised ₹90,482 crore through 69 issues while 92 small and medium enterprise (SME) offerings mobilised ₹4,167 crore. September emerged as the strongest month with combined fundraising of ₹41,504 crore, accounting for nearly 44% of the quarter's total. Mainboard offerings raised ₹39,381 crore across 34 issues while SME IPOs raised ₹2,123 crore through 52 offerings. The relief comes in response to representations from the industry, highlighting challenges in raising capital amid subdued investor participation and market volatility. As of September in FY27, a total of 78 companies had raised around ₹94,276 crore. The record fundraising was further bolstered by the market debut of the National Stock Exchange (NSE), the largest IPO of the current fiscal year and the second-largest public issue in Indian market history, which significantly lifted September's total fundraising figures. According to The Hindu BusinessLine, the industry body said the relaxation had facilitated a higher number of IPO launches, contributing to nearly ₹1 lakh crore in capital formation in the July-September quarter.
Market experts have welcomed the extension of regulatory relief, with industry leaders emphasizing both the benefits and limitations of the measure. Sandeep Chordia, COO of Kotak Neo, stated that the extension would allow IPO-bound companies to recalibrate their fresh issue sizes based on market conditions, though he cautioned it should be viewed as an enabling measure rather than a guarantee of IPO success. Vaqarjaved Khan, senior fundamental analyst at Angel One, noted that the flexibility would help issuers and merchant bankers price offerings more realistically, improving chances of deals going through amid market volatility. However, he emphasized that the move would not prevent all postponements or withdrawals, with final decisions still depending on market conditions, valuations and investor demand. Nirav Karkera, head of research at W by Groww, highlighted that the relaxation would give issuers greater flexibility compared to the earlier 20% limit and reduce procedural delays and costs. Market expert Arun Kejriwal observed that issuers were already willing to launch offerings at lower prices amid market uncertainty, a trend likely to continue despite the relaxation.
IPO-bound companies will be permitted to increase or decrease the size of their fresh issues by up to 50% without the need to file fresh draft offer documents with the market regulator. Under the revised framework, companies can increase or decrease their fresh issue size by up to 50%, provided the main objects of the issue remain unchanged and the prescribed compliance requirements are met. According to the communication seen by Mint, the lead manager may file the updated offer document based on the revised issue size if there has been no change in the main objective of the issue. The lead manager will be responsible for updating the draft red herring prospectus (DRHP) to reflect the revised issue size, while merchant bankers must ensure all appropriate changes are made public through an addendum. Companies availing themselves of the relaxation must ensure that the primary objective of the IPO remains unchanged and provide justification for revising the issue size. Under the earlier regulatory framework, companies were required to submit fresh draft offer documents if the proposed issue size changed by more than 20%. The 50% flexibility comes with safeguards - issuers must ensure there is no change in the core objectives of the issue, lead managers will be required to certify that the offer documents remain compliant with regulatory provisions, and any revisions must be appropriately reflected through an addendum to the DRHP. The relief applies specifically to the fresh issue component, through which companies raise new capital, and not the offer-for-sale (OFS) portion, where existing shareholders sell their shares.
Despite the regulatory relief, experts anticipate a more challenging environment for IPOs in the remainder of FY27. Chordia noted that primary market activity would depend on investor sentiment, valuations and issuers' ability to price offerings attractively amid volatility in crude oil prices and bond yields. Khan expects the primary market to remain active for the rest of FY27, though the pace of issuances would depend on market conditions, with rising crude oil prices and higher US bond yields potentially putting pressure on liquidity and valuations. He emphasized that companies with strong financials, consistent cash flows and reasonable valuations would likely attract better demand, while issuers seeking aggressive valuations could struggle, particularly if secondary markets remained volatile. Karkera expects the number of IPOs to remain high in the second half of FY27, though the total amount raised would depend on how many large issues hit the market. Kejriwal remained optimistic, stating the primary market would continue to be buoyant in the second half unless a major geopolitical event disrupted investor sentiment.
