India’s IPO market has been buzzing over the last few years. Oversubscriptions, sky-high grey-market premiums (GMPs), and spectacular listing-day gains have dominated headlines. But beneath this glitter, a quieter and more alarming trend is emerging — one that investors cannot ignore.
A closer look at India IPO performance from 2023 to 2025 reveals a surprising reality: more than half of India’s large IPOs (₹500 crore and above) are now trading below their issue price.
Yes, even after massive pre-listing hype.
Yes, even after strong listing pops.
And yes—this challenges long-held assumptions about IPO investing in India.
Let’s explore what’s happening, why it matters, and what investors should do next.
Table of Contents
The Reality Check: Listing Pops Don’t Guarantee Long-Term Returns
“According to an analysis by Economic Times, between 2023 and 2025, 155 sizable companies debuted in India’s primary market. Over 51% of these IPOs are now trading below their issue price, with several high-profile listings correcting 50–70% from their debut levels.”
In simple terms, every second major IPO from the last three years is underwater.
Even heavily subscribed, institutionally backed, and well-marketed IPOs struggle to maintain momentum post-listing.
A study by Client Associates, analysing long-term returns of new-age and growth-oriented IPOs, found that:
- Only 36% of IPOs delivered long-term alpha
- Just 32% of investors who bought after listing beat benchmark returns
Key takeaway: Oversubscription, brand hype, and high GMPs do not guarantee lasting shareholder value.
What’s Causing Post-Listing Weakness?
The decline in post-listing performance is driven by market behaviour, valuation dynamics, and business fundamentals:
1. Issuer Company performance
Post-IPO, many companies report slower revenue growth, weaker margins, limited debt reduction, delayed use of IPO funds, missed milestones, and cautious management commentary — all of which quickly erode investor confidence.
2. Grey Market Premiums Inflate Expectations
GMPs often reflect speculative trading rather than genuine demand. Consequently, stocks get overpriced before listing, leaving little room for upside after debut.
3. Anchor Investor Selling Pressure
Anchor investors play a crucial role during IPO allocations. After lock-in periods expire, many book profits, creating sudden supply pressure that drives stock prices down.
4. Sector Hype Outweighs Business Fundamentals
Many companies rush to go public because their sector is trending, not because their financials are mature. When reality catches up, stock prices cool sharply.
5. Early-Stage Companies Struggle Post-IPO
Most recent IPO candidates are:
- Early-stage
- Highly leveraged
- Not consistently profitable
- Still proving product-market fit
The market expects rapid growth; companies often deliver moderate progress, which hurts valuations.
6. Institutional Pricing Power Shapes Valuations
Institutional investors often push for aggressive pricing. If they exit early or lose conviction, the stock drops sharply.
Why This Matters for the Indian Economy
The IPO market is a vital part of India’s economic ecosystem, enabling:
- Capital formation
- Job creation
- Innovation acceleration
- Retail investor participation
However, a rising number of underperforming IPOs has broader implications:
- Retail investor trust declines — frequent losses reduce participation.
- Strong companies face tougher scrutiny — promising businesses may struggle to raise fair valuations.
- Long-term market health is affected — weak primary markets slow innovation and expansion.
Road Ahead: How Investors Should Approach IPOs
Avoiding IPOs entirely is not the answer. Instead, investors should shift from hype to evaluation:
1. Evaluate the Business Model
Ask:
- Is the company solving a real problem?
- Does it have a competitive moat?
- Are revenues stable and diversified?
- Is profitability improving?
2. Ignore the Grey Market Premium
GMP is not a valuation metric. Treat it as noise, not a buy signal.
3. Analyse Anchor Investor Composition
- Long-only funds → positive sign
- High number of trading-oriented investors → caution required
4. Avoid Chasing Listing Pops
Buying immediately after a strong debut often leads to losses. Wait for the stock to stabilise and show trend clarity.
5. Read the Offer document filed with the Stock Exchange Carefully
Check:
- Summary of Offer Document
- Object of the Issue
- Capital Structure for pre-ipo
- Risk disclosures
- Read Financial Statements
- Promoter holdings
- Litigation or regulatory issues
6. Prefer Consistent Profitability
Loss-making companies with “high-growth stories” are tested rigorously post-listing.
7. Set Clear Exit Rules
Define:
- Target returns
- Stop-loss levels
- Timeline
Do this before investing, not after.
8: Valuation Check
Conduct a valuation check to ensure the IPO’s pricing is reasonable.
Conclusion: The IPO Market Is Maturing — And So Must Investors
The post-2023 IPO landscape shows that markets reward fundamentals, not hype. India’s primary market will continue to offer opportunities, but effortless gains are no longer guaranteed.
A cautious, rational, and data-driven approach helps investors avoid traps while seizing genuinely strong IPO opportunities.
The IPO market remains a powerful wealth creator, but only for investors who know what to avoid and what to look for.
Disclaimer:
The information in this article is for educational purposes only and is not investment advice. IPOs and equity markets involve risks. Readers are advised to conduct independent research before making investment decisions.
