Budget incentives may reshape India's IPO strategies

Subscribe to enjoy similar stories. The Union Budget 2026, with its record ₹12.2 trillion capex outlay and incentives such as tax credits and production-linked incentives (PLI) for sectors including railways, green energy, semiconductors, biopharma, and textiles, is likely to reshape IPO strategies of several private firms. Companies looking to go public in FY27 are likely to pivot from debt repayment and high offer-for-sale (OFS) components towards increased greenfield capex in their fundraises, boosting fresh equity for factories, machinery and capacity expansion, multiple dealmakers told Mint.

"We anticipate 10-20% rise in capex allocation in DRHPs (draft red herring prospectus) for these sectors within Q1 FY27, as firms leverage tax credits and PLI extensions to justify higher valuations," said Vipin Singhal, director at Anand Rathi Investment Banking. “This realignment will counter prior debt-heavy patterns." It's been just over a week since finance minister Nirmala Sitharaman unveiled the budget. Already, IPO bankers are hunting mandates to ride the government's capex wave, bankers said.

Though it is too early to identify specific companies and themes, investment banks may push companies to tweak "use of proceeds" even pre-filing. This can help companies better capture budgetary incentives and play the market sentiment, Singhal said. Government spending is not directly linked to capex needs of IPO-bound companies, but it cascades through supply chains, boosting contractors, manufacturers, and suppliers.