India’s stock market is seeing a churn that balances hope on one end (domestically) with opportunity on the other (by foreign investors). With a record 373 companies going public in 2025, most foreign investors used the opportunity to cash in on the hope, exiting their investments with a premium as domestic investors took their place.
Over the past year, this hope has led international companies to repatriate more than $5 billion to their home countries. Many of these companies operated unlisted subsidiaries in India for a long time, such as LG Electronics or Hyundai Motor, and have used them to execute large-scale profit-taking exercises. For these companies, the gains here have helped them fund global R&D and address overseas debt.
The Domestic Liquidity Boost
This massive shift has come about due to a stark difference between local investment trends and global corporate financing needs:
- The Unprecedented Hope in India’s Growth Story: In 2025, domestic investors poured in an unprecedented 7.14 lakh crore in the markets, funnelled through Systematic Investment Plans (SIPs), domestic Mutual Funds and directly through retail trading accounts. This large pool of local demand motivated foreign investors to sell out a part of their holdings, with most of these being Offer For Sale (OFS) issues.
- Funding global operations: Foreign parent companies have been facing tighter credit conditions, which have forced them to pivot toward emerging technologies like electric vehicles (EVs) in the automotive sector. Selling minority stakes have helped them to quietly unlock capital to fund research and development or to strengthen corporate balance sheets back home.
- Premium value arbitrage: Indian subsidiaries often trade at significantly higher price-to-earnings (P/E) ratios compared to their parent companies. This makes it highly attractive to sell a part of their stake offering a far greater value than their home markets could yield.
The OFS Capital Flight
For these foreign companies, the OFS structure offered a convenient way to liquidate their holdings, although most did so only in part. According to Reuters, nearly 80% of the money raised by them through the IPOs was sent abroad. In simpler terms, for every dollar raised, almost $59 was sent back to the home countries.
This trend is expected to continue, with another set of high-profile IPOs, including Walmart-owned PhonePe, Flipkart, and a few others, expected to hit the markets in 2026.
For foreign investors, India has been seen as an opportunity to produce and sell, not as much to manufacture for the world. Though that has been changing gradually, capital flight will continue in one way or another, strengthened in part by the growing trust domestic investors have in the markets.
