Summary:
SEBI is discussing a proposal to permanently allow IPO-bound companies to revise fresh issue sizes by up to 50% without filing a new DRHP. The temporary relaxation runs until March 31, 2027, as India's IPO market records strong fundraising activity.
The Securities and Exchange Board of India (SEBI) is looking at providing more flexibility to companies planning initial public offerings (IPOs). The talks with the Association of Investment Bankers of India (AIBI) include increasing the permissible change in fresh issue size from 20 per cent to 50 per cent without requiring filing a fresh Draft Red Herring Prospectus (DRHP) by the companies. The proposal arrives as the market sees volatility and shifts in what investors want.
IPO Rules: What Changes Are Being Proposed?
Under the normal regulatory regime, companies have to file fresh draft offer documents if the size of the proposed fresh issue is different by more than 20%.
AIBI has asked for this threshold to be increased to 50%, to align with the existing threshold for the offer-for-sale (OFS) component.
In a fresh issue, a company issues new shares to raise capital. In an OFS, existing shareholders sell their holdings.
The proposed change would permit companies to modify fundraising plans without having to restart the regulatory filing process.
But SEBI has not yet taken a final call on making the higher threshold a permanent fixture.
SEBI extends temporary relief till March 2027
SEBI had earlier introduced temporary flexibility in April 2026 after increased uncertainty in the market.
The regulator, on October 12, extended this relaxation till March 31, 2027.
Under the interim framework, companies can raise or lower their fresh issue size by up to 50% without filing a fresh DRHP.
Terms & Conditions Apply:
- The objectives of the IPO must remain the same.
- Companies should give rationale for change in issue size.
- All relevant changes must be reflected in updated offer documents.
- The revisions must be made public to investors in a public addendum.
The latest discussions are about making this flexibility permanent in the IPO framework, and not a temporary fix.
Indian IPO Market Collects ₹94,649 Cr in Q2FY27
The broader equity market was under pressure, but the primary market saw huge fundraising activity in the July–September 2026 quarter.
| IPO category | Q2FY27 |
| Mainboard IPOs | 69 |
| Mainboard fundraising | ₹90,482 crore |
| SME IPOs | 92 |
| SME fundraising | ₹4,167 crore |
| Total IPOs | 161 |
| Total raised | ₹94,649 Cr |
Of this, the mainboard and SME offerings contributed ₹41,504 crore in September.
Some companies have changed their IPO plans, too.
In October 2026, Oravel Stays, which is the parent company of OYO, pared down its proposed fresh issue to ₹3,350 crore from ₹6,650 crore.
In August, Hero Motors had trimmed its proposed IPO size to ₹1,000 crore from ₹1,200 crore.
These changes reflect how companies calibrate fundraising needs to market conditions.
Will the Changes Proposed Affect Stock Market Performance?
The changes proposed will not directly impact the share prices of existing listed companies. The main ones are for companies that are planning to go public.
Greater flexibility could help companies avoid delays as valuations shift between filing draft documents and launching an IPO.
But cutting down the size of an issue could also mean raising less cash for expansion, debt repayment or other planned objectives.
Changes to issue size can affect share availability, fundraising goals and the split between fresh issue and OFS for retail investors.
The final rules will determine how much leeway IPO-bound companies will have, while still requiring disclosure.
The temporary 50% relaxation will continue to be applicable for eligible IPOs opening on or before March 31, 2027.
