A recent study by Bank of Baroda (BoB) reveals that only about a quarter of funds raised through IPOs this fiscal year are actually allocated to capital expenditure (capex). This suggests that the bulk of IPO proceeds are being used for debt repayment, working capital or internal restructuring rather than growth-oriented investments.
The analysis covered 189 IPOs in the first seven months of FY26, collectively targeting ₹1.82 lakh crore. Of this, fresh equity accounted for ₹1.20 lakh crore while the rest came via offer-for-sale (OFS) by existing shareholders.
Breaking down the fresh equity portion, only 26 % is earmarked for expansion or capex. Meanwhile 29 % is slated for debt repayment, 9 % for investments in subsidiaries, and 6.2 % for working-capital needs. For roughly 24.5 % of the funds, the intended use remains unspecified.
This trend aligns with recent concerns voiced by policy-makers that many IPOs are increasingly being used as exit routes for early-stage investors, rather than as a means to fund new growth.
For investors and market watchers, this raises a key question: are IPOs primarily serving corporate financial housekeeping or fueling business expansion? The findings suggest that a substantial portion of fresh public capital is not being deployed for building additional capacity or long-term growth.
