IPO Boom Fizzles as Market Selloff Erodes Gains
The FY25 IPO wave, which saw 78 companies raise over ₹1.6 lakh crore, has lost significant momentum as nearly half of the newly listed stocks are now trading below their issue price. The sharp market correction since September 2024 has wiped out early gains for many stocks, dampening investor sentiment in the primary market.
Out of the 78 IPOs, 34 companies ended the fiscal year below their issue price. Among them, 10 stocks debuted at a discount and never recovered, while 24 stocks initially surged but later saw their gains erased.
Total IPOs in FY25: 78, raising ₹1.6 lakh crore.
34 stocks now trade below issue price, with 10 debuting at a discount.
Market correction since September 2024 has impacted post-listing performance.
Biggest IPO Underperformers: Heavy Losses for Several Newly Listed Firms
Several IPOs that launched amid high expectations have plummeted well below their issue price, causing significant losses for investors. Among the worst performers:
Godavari Biorefineries: Down 58% from its issue price.
Carraro India & Western Carriers India: Both trading 56% below issue price.
Other major laggards include Saraswati Saree Depot, Tolins Tyres, Shree Tirupati Balajee Agro Trading, Akme Fintrade, Ecos India Mobility & Hospitality, Suraksha Diagnostic, and Bazaar Style Retail, all of which have lost between 40-50% of their value.
Additionally, around 10 stocks that initially surged post-listing are now trading near their issue price, struggling to hold onto even single-digit gains.
Several newly listed stocks have lost 40-58% of their value.
Even stocks that saw strong debuts have since surrendered their gains.
IPO performance has been volatile, reflecting broader market conditions.
Some IPOs Still Thriving Despite Market Correction
While many IPOs have disappointed investors, a few outliers have bucked the trend, maintaining strong gains despite the broader selloff. These include:
KRN Heat Exchanger & Refrigeration
Bharti Hexacom
Quadrant Future Tek
Orient Technologies
Additionally, six stocks that started off with modest gains or even at a discount have since rallied significantly, generating strong returns for investors. These include:
Zinka Logistics
Sagility India
Dr Agarwal’s Health Care
Aadhar Housing Finance
Awfis Space Solutions
Aventive Hospitality
Only a handful of IPOs have sustained or extended their post-listing gains.
Outperformers have defied market trends, benefiting from sectoral strength.
Stocks with strong fundamentals have continued to attract investor interest.
Why Are So Many IPOs Struggling? Experts Point to Aggressive Pricing
Market analysts attribute the weak post-IPO performance to aggressive pricing. Over the last few years, IPO demand has skyrocketed, leading companies to set higher valuations, often leaving little room for sustained price appreciation.
The average IPO subscription rate surged from 16x in FY22 to 64x in FY24, reflecting high investor enthusiasm but also creating a supply-demand imbalance that has made IPO allocations tougher for retail investors.
Experts note that many retail investors participate in IPOs primarily for short-term listing gains. However, once these initial gains are realized, premiums over the issue price tend to erode. Additionally, the expiration of the one-month lock-in period for institutional investors has led to an increased supply of shares in the market, further weighing on stock prices.
Aggressive IPO pricing has led to valuation concerns.
Retail investors focus on short-term listing gains, causing price volatility.
Institutional investor selling post-lock-in period has pressured stock prices.
