Indian IPOs Now Prioritize Debt Repayment Over Capex
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- Debt repayment has emerged as the single largest use of Indian IPO proceeds, with 95 companies allocating ₹35,055 crore out of ₹1.47 lakh crore raised across 2024, 2025, and 2026 — just ahead of capex at ₹34,458 crore (23.3%) spread across roughly 200 issuers.
- Pradyumna Nag, founder of Prequate Advisory, warned the trend suggests promoters and lenders are using a hot IPO market to offload risk to the public at full price, with offers engineered around balance-sheet needs and insider liquidity rather than building investor wealth or funding new projects.
- Samir Bahl, CEO of Anand Rathi Advisors, pushed back, calling the deleveraging a conscious move toward optimal capital restructuring that swaps debt for equity in a bullish market, lowers interest costs, improves PAT margins, and strengthens credit ratings.
- The crossover in fund-use priorities happened in 2024, when debt-repayment allocations of ₹12,014 crore first exceeded capex spending of ₹9,807 crore; in 2025, capex regained the lead (₹21,839 crore vs ₹16,733 crore), but the 2024-2026 aggregate still tilts toward deleveraging.
- Adoption is widening: 39 of 93 IPOs in 2024 listed debt reduction as an objective, rising to 51 of 103 in 2025, and 5 of 12 launches in 2026 so far — while working capital (₹26,928 crore across 71 issuers) and general corporate purposes (₹16,355 crore across 145 companies) round out the major categories.
- Nag's deeper concern is the investor-scrutiny gap: until market focus shifts from 'who is the IPO' or 'how big is it' to 'what share goes into projects earning more than the cost of equity,' the mismatch between subsequent earnings and IPO pricing will keep widening.
Why it matters: For public investors, nearly a quarter of every rupee raised in recent Indian IPOs is going to pay off lenders rather than fund growth — meaning shareholders are absorbing the equity risk while capex, the engine of future earnings, is being shortchanged. The data shows the deleveraging tilt is structural (95 of ~200 issuers), not a one-off, and 2024 was the first year debt repayment formally overtook capex in allocation size.
