Retail investor enthusiasm in India’s primary market is showing signs of fatigue as two recent initial public offerings (IPOs)—Schloss Bangalore (Leela Hotel) and Aegis Vopak Terminals—failed to draw strong interest. Both public issues witnessed undersubscription in the retail segment, with Schloss Bangalore’s IPO garnering just 83% subscription and Aegis Vopak Terminals only 77%, raising fresh questions about the sustainability of retail demand in an increasingly crowded IPO landscape.
Highlights:
Schloss Bangalore (Leela Hotel) IPO retail segment subscribed at 83%, Aegis Vopak at 77%.
Average retail applications in IPOs fell from over 32 lakh in January to under 2 lakh in subsequent months.
2025 average retail participation stands at 16.7 lakh, below 2024’s 18.9 lakh.
First decline in average retail IPO applications since 2022.
Market experts flag valuation concerns, issue-bunching, and investor selectivity as key reasons.
Retail IPO Participation Drops Sharply After January Surge
According to Prime Database, average retail investor participation in IPOs in 2025—up to May 24—stands at 16.7 lakh applications per issue, down from 18.9 lakh in 2024. This trend follows an intense January, during which over 32 lakh applications were received per IPO, but dropped off significantly in subsequent months. Analysts attribute this sharp fall to changing investor behaviour, with many now prioritising fundamentals over hype.
Highlights:
January 2025 saw peak retail interest with over 32 lakh applications per IPO.
Following January, average dropped sharply to below 2 lakh retail applications.
Trend marks first annual decline in average retail applications since 2022.
In 2022, average fell to 5.66 lakh from 14.45 lakh in 2021 due to weak IPO environment.
Shift in Retail Investor Behaviour: Valuations, Fundamentals Take Centre Stage
The underwhelming response to the Schloss Bangalore and Aegis Vopak IPOs comes despite the fact that Belrise Industries’ IPO, which closed just before the two, saw a robust 4.3 times retail subscription. This contrast underscores a growing selectivity among retail investors. Experts believe the typical reliance on grey market premiums is fading, as retail investors increasingly focus on price-to-earnings ratios, return on investment metrics, and promoter credibility.
Highlights:
Belrise Industries IPO saw strong 4.3x retail subscription—contrast to Leela and Aegis.
Retail investors now focus on P/E ratios, ROI, and valuation sanity.
Grey market premiums no longer decisive in retail participation.
Tools on trading platforms enable retail investors to evaluate metrics independently.
Crowded IPO Calendar, Valuation Concerns Dampen Sentiment
The market is bracing for a heavy supply of IPOs, with nearly 140 companies lined up to raise over ₹2 lakh crore. This bunching of issues is seen as contributing to demand dilution. While mutual funds are reportedly holding high cash levels (7% of equity AUM as of April 2025), concerns about inflated valuations—especially among startups and loss-making entities—persist. Market participants stress that only fundamentally sound and reasonably priced issues are likely to sustain investor interest.
Highlights:
Nearly 140 companies with IPO plans worth over ₹2 lakh crore in pipeline.
Demand dilution due to issue clustering could weigh on investor sentiment.
Mutual funds have capacity to absorb IPO supply due to high cash levels.
Overvaluation concerns, especially in startup space, remain a drag on participation.
Retail Participation in IPOs is Dipping
| Year | Retail Applications (in lakh) |
|---|---|
| 2019 | 4.73 |
| 2020 | 13.41 |
| 2021 | 47.76 |
| 2022 | 30.55 |
| 2023 | 47.20 |
| 2024 | 70.06 |
| 2025 (Till 24 May) | 27.72 |
Experts Emphasize Quality Over Quantity Amid IPO Rush
Industry voices such as Rakesh Choudhari of Keynote Capital and Raghav Gupta of IIFL Capital assert that investor discernment is at an all-time high. The IPO market, once driven by hype and scarcity, is evolving to reward differentiated business models, sound governance, and fair valuations. Investors are confident that skipping a few IPOs no longer translates into missed opportunities, given the abundance of upcoming issues.
Highlights:
Investors confident about skipping IPOs due to ample upcoming opportunities.
Sound fundamentals and unique business models still attract demand.
Trading platforms providing valuation tools are aiding retail decision-making.
Concerns over loss-making firms and aggressive pricing limit subscription enthusiasm.
