The surge has come alongside a decline in average issue sizes and more muted listing-day returns compared with last year.
Illustration: Dominic Xavier/Rediff
India’s healthcare sector has seen a clear pickup in initial public offering (IPO) activity in calendar year 2025, with a sharp rise in the number of listings, while total capital raised remained flat.
However, this surge has come alongside a decline in average issue sizes and more muted listing-day returns compared with last year, reflecting a more cautious secondary market and a shift towards smaller-ticket issuances.
57% rise in number of issues
Capitaline data shows that 11 healthcare companies raised ₹12,317 crore through IPOs in 2025, compared with eight firms that mobilised ₹12,247 crore in 2024.
This translates into a 57 per cent rise in the number of issues and a marginal 0.57 per cent increase in total fundraising year-on-year.
The growth in deal count, however, masks a contraction in deal sizes.
The average issue size fell to ₹1,120 crore in 2025 from ₹1,531 crore in 2024, as a larger number of relatively smaller healthcare businesses tapped the capital markets.
While more than half of healthcare IPOs last year were sized above ₹1,500 crore, only two of the 11 issues in 2025 crossed that threshold.
Listing-day performance has also softened. The average listing gain declined to 14.07 per cent in 2025 from 19.26 per cent in 2024, mirroring the broader weakness seen in secondary markets.
“More healthcare companies now get listed because it’s a good, stable business with good growth potential given the large population, rising incomes and urban-centric demographics,” said Ajay Garg, managing director of Equirus.
“Post-Covid, there is rising awareness and a willingness to spend more on health. Earlier, the listed space in the healthcare sector was dominated by pharma companies dependent on the market, and companies benefiting from domestic healthcare consumption had scant presence,” he said.
Garg attributed the decline in listing gains largely to market conditions.
“The decline in listing gains is due to pressure on the secondary market this year. Newly listed companies cannot entirely buck the trend of the overall secondary market stock performances,” he said.
Market participants point out that valuation comfort in the listed space continues to act as a pull for new issuers, even amid volatility.
“It is the post-listing valuations commanded by recently listed healthcare sector firms that are luring others to the equity markets,” said G Chokkalingam, founder and head of research at Equinomics.
He noted that more than 50 per cent of healthcare foreign direct investment has flowed into hospitals, and that even after recent corrections, several listed players are trading at around 10 times enterprise value to annual sales.
“Unlike many new-age digital businesses, these firms have durable business models and are consumer-facing, which makes them defensive bets,” Chokkalingam added.
Surge in small and SME players
The rise in IPO volumes this year has also been driven by a wave of smaller healthcare companies accessing public markets.
“The number of issues went up in 2025, but the average issue size and returns were actually down,” said Nilaya Varma, cofounder and group CEO of Primus Partners.
According to Varma, sustained investor interest in healthcare, coupled with easier market access, encouraged hospitals, diagnostic chains and service providers to seek public funding for balance-sheet strengthening and strategic expansion.
“This influx of small and SME players increased the number of listings but diluted the average deal size,” she said, adding that companies established less than 20 years ago accounted for over 50 per cent of the capital raised, further skewing deal sizes lower.
Varma also pointed to heightened market volatility, which has “intensified investor risk aversion,” resulting in subdued post-IPO performance across many healthcare listings this year.
Private equity investors see the IPO trend as a sign of structural maturation rather than a short-term capital rush.
“The surge in healthcare-services IPOs signals the structural maturation of private equity vintages utilising India’s deep domestic liquidity for exits, rather than a mere capital hunt,” said Sunil Thakur, partner and investment committee member at Quadria Capital.
Shift from multi-specialty chains to regional players
Thakur noted a shift away from large, generic multi-specialty hospital chains towards focused regional players and single-specialty models with scalable unit economics.
Over the past three calendar years, hospitals and diagnostics companies listed on the main boards have raised more than Rs 7,200 crore, he said.
“The moderation in post-listing returns reflects a discerning market where performance is driven by valuation discipline, scale, growth and capital efficiency, rather than scarcity premiums alone,” Thakur said, adding that aggressive pricing in several recent issues has further capped listing gains.
He also highlighted that, in line with broader IPO trends where offers for sale (OFS) accounted for around 66 per cent of issue sizes over the last three years, healthcare listings are increasingly serving as exit routes for early investors.
“This is a cycle of monetisation by early backers rather than capital-intensive greenfield expansion,” Thakur said, noting that regulatory changes — such as the steep revision in CGHS rates, including a more than 500 per cent hike in ICU charges–are emerging as structural tailwinds for healthcare services companies, even as pharmaceutical price controls remain a concern.
Together, the data and market commentary suggest that while healthcare IPOs are becoming more frequent in 2025, investors are rewarding only those issuers that demonstrate valuation comfort, operational strength and a clear path to profitable growth.
Feature Presentation: Aslam Hunani/Rediff
