IPO Boom Fizzles for Most as Only a Few Deliver Big Gains

The IPO market in 2024 has been buzzing with activity, but the success stories are few and far between. Since January, more than 100 companies have made their market debut, but only 6% of newly listed IPOs have managed to double investor wealth.

According to an analysis by Moneycontrol, just six standout names — Jyoti CNC Automation, KRN Heat Exchanger & Refrigeration, Bharti Hexacom, Premier Energies, SRM Contractors, and Interarch Building Products — have delivered between 102% and 267% returns from their respective issue prices. These companies have defied the odds in what has turned out to be a challenging environment for IPOs.

The Tougher IPO Landscape in 2024

The backdrop to this trend is a more cautious and selective IPO market, shaped by valuation resets, sectoral trends, and post-listing earnings performance.

Despite the large number of listings, most IPOs have failed to meet investor expectations, making it clear that the era of easy IPO gains may be fading. With markets nearing all-time highs, investors are becoming more discerning, looking beyond hype and headlines.

What’s Driving IPO Outperformance?

The few companies that delivered strong gains seem to share common traits — high-growth sectors, strong market narratives, and solid post-listing performance.

As Umesh Agrawal, Fund Manager at 360 One Asset, puts it:

“The outperformance of IPOs was seen in sectors where the growth is very high.”

He points to macroeconomic themes driving this growth, such as:

• The rising emphasis on renewable energy

• Strong domestic demand in affordable retail

• The government’s China+1 strategy aimed at making India a global manufacturing hub

These sectoral tailwinds have helped certain companies not just survive, but thrive in a volatile post-listing environment.

Investor Caution Advised

As the IPO pipeline fills up once again, experts are urging investors to tread carefully. History has shown that only a handful of IPOs actually end up creating wealth, especially when the markets are near their peaks.

So while the buzz around new listings continues, the real challenge lies in choosing quality over quantity.