Two Years After IPO, India’s ‘Next Big Things’ Lost Rs. X Lakh Crore — Because Investors Ignored the Math

Two years post-IPO, India’s ‘next big things’ have lost ₹X lakh crore. The reason isn’t the companies. It’s the math nobody did at the time.

When One 97 Communications came to the market at ₹2,150 per share in November 2021, most retail investors were told they were buying India’s digital future.

What they were actually buying was a mathematical impossibility.

At the IPO valuation, Paytm was priced at nearly 50 times annualised sales. Even optimistic analysts at the time admitted the company would need extraordinary expansion just to justify the issue price.

Here’s what that meant in practical terms: for a retail investor buying at IPO price to earn even a modest 10% annualised return over five years, Paytm would have needed to compound revenue at breakneck speed while simultaneously achieving margin expansion and maintaining market dominance in one of the world’s most competitive fintech sectors.

Instead, the stock collapsed more than 60% from issue price.

And Paytm was not the exception.

The market has been repeating the same warning for four years. According to a SAMCO Securities study, 64% of IPOs launched between 2021 and 2024 failed to outperform the BSE IPO Index, while 73% underperformed the Nifty Smallcap 250.

That statistic destroys the comforting narrative that “some IPOs fail while others succeed.”

This is not randomness.

It is structure.

India’s IPO ecosystem increasingly became a machine optimised to maximise listing-day valuation, not long-term shareholder returns. The issue wasn’t that weak companies came public. Many of these businesses had genuine scale, impressive founders, and growing markets.

The real problem was pricing.

When investors buy a company at absurd multiples, future growth is already pre-sold into the stock price. By the time retail participation begins, the upside has often already been mathematically consumed.

And now, just as Zepto and five other companies receive SEBI approval for new IPOs, the same cycle is preparing to restart again.

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New Upcoming IPOs India (May–June 2026)

IPO India The Pattern Was Always There

Take the poster children of India’s startup IPO boom.

Paytm: The impossible valuation

Paytm listed at a valuation exceeding many profitable banks despite inconsistent revenue growth and heavy losses. At nearly 50x sales, the stock required hypergrowth for years merely to justify its listing price.

But growth slowed.

Margins remained weak.

Competition intensified.

The stock eventually became the defining symbol of IPO excess in India.

FSN E-Commerce Ventures: Great company, terrible entry price

Nykaa’s underlying business was far better than many internet IPO peers. The brand had loyalty, strong category leadership, and improving operational execution.

Yet the IPO valuation implied perfection.

Investors buying near the peak were effectively assuming years of uninterrupted growth and sustained premium margins in a brutally competitive consumer market.

The company executed reasonably well.

The stock still disappointed.

That distinction matters.

A company can succeed operationally while shareholders still lose money if they overpay initially.

Swiggy: Public markets inherited private market pricing

Swiggy entered the market after years of venture-capital-driven valuation inflation across quick commerce and food delivery.

The assumption behind the pricing was that scale alone would eventually guarantee profitability.

But public markets eventually demand earnings, not narratives.

If a business lists at aggressive revenue multiples before sustainable cash flow exists, investors are effectively betting on future perfection.

Very few businesses achieve perfection.

Category	Details
IPO Company	Swiggy
IPO Size	$1.34 billion
IPO Month & Year	November 2024
IPO Valuation	Approximately $11.3 billion
Peak Private Valuation (2022)	Approximately $13 billion
IPO Issue Price	₹390 per share
IPO Price Band	₹371 – ₹390 per share
Valuation Difference vs Peak	About 13% lower than 2022 peak valuation
Secondary Market Share Price Range Before IPO	₹360 – ₹425 per share
Institutional Valuation Estimates	Invesco valued Swiggy between $13–15 billion

Hyundai Motor India: Even profitable giants are not immune

Unlike internet startups, Hyundai Motor India came with profitability, scale, and brand power.

Yet the stock still struggled post-listing because valuation again became the issue.

The IPO extracted premium pricing from investors at a time when the Indian primary market was still willing to pay aggressively for marquee names.

Two years later, the stock still trades below IPO price.

That matters because it destroys another myth: only loss-making startups disappoint after listing.

No. Even good companies become bad investments when priced too expensively.

Category	Details
Company	Hyundai Motor India
Q4 FY26 Net Profit	₹1,256 crore
YoY Profit Change	Declined 22.2% year-on-year
EBITDA Margin FY26 Q4	10.4%
Margin Compression	Down 370 basis points
Key Reasons for Margin Pressure	Rising commodity costs, weaker vehicle mix, and new capacity-related expenses
FY26 Annual Net Profit	₹5,432 crore
FY25 Annual Net Profit	₹5,640 crore
Domestic Sales Performance FY26	Declined 2.3%

The counter-example: reasonable pricing still works

Some IPOs did create wealth.

But almost all successful examples shared one common characteristic: realistic expectations.

Companies that left room for upside — instead of squeezing every possible rupee from IPO buyers — performed materially better over time.

That is the real dividing line.

Not sector.

Not founder quality.

Not branding.

Pricing discipline.

How the IPO Machine Actually Works

Retail investors are often taught that IPO pricing reflects “market demand.”

Technically true.

Practically misleading.

The IPO process is not designed primarily to maximise long-term investor returns. It is designed to maximise capital raised during issuance.

That changes incentives for everyone involved.

Investment bankers are rewarded for valuation size

The higher the valuation, the larger the issue.

The larger the issue, the bigger the fees.

No investment bank gets rewarded for saying:

“This company should list 35% cheaper so future investors can earn better returns.”

In fact, the system incentivises the opposite.

Anchor investors are playing a different game

Retail investors often treat anchor participation as validation.

But anchors frequently operate under entirely different risk structures.

Many receive allocations before listing hype peaks. Some exit after lock-in periods expire. Others use IPO participation for portfolio signalling rather than long-term ownership.

Their incentives are not aligned with a retail investor hoping to compound wealth over five years.

That distinction became obvious repeatedly between 2021 and 2024, when several heavily marketed IPOs saw sustained selling pressure after lock-in expiries.

Bookbuilding creates valuation momentum

Once institutional demand builds during bookbuilding, pricing starts feeding on itself.

Grey market premiums rise.

Media narratives intensify.

Retail fear-of-missing-out explodes.

At that point, valuation discipline often disappears entirely.

Investors stop asking:

“What return can this business realistically generate from this price?”

Instead, they ask:

“How much listing gain can I get?”

That mindset transforms investing into short-term speculation.

Retail becomes the liquidity event

This is the uncomfortable truth few say openly.

For many IPOs, the public issue is effectively the monetisation phase for early stakeholders.

Promoters partially exit.

Private investors dilute.

Employees unlock wealth.

The retail buyer enters last — after years of private valuation appreciation have already occurred.

By listing day, much of the future upside may already have been captured privately.

That is why the underperformance statistics are not surprising.

The system is functioning exactly as designed.

The 3 Fatal Flaws of India’s “Next Big Things”

The brutal math nobody did during the IPO boom was not just valuation multiples.

It was dilution mechanics.

More specifically, Offer for Sale (OFS) structures.

Retail investors believed they were funding growth. In reality, a massive portion of IPO money never entered the companies at all. It went directly to existing shareholders — private equity firms, venture capital funds, and early investors cashing out near peak valuations.

That distinction changes everything.

Because when IPO proceeds primarily flow to insiders instead of business expansion, the public market effectively becomes a liquidity event for private capital.

The company gets headlines.

The early investors get exits.

Retail gets the risk.

1. The Offer for Sale (OFS) Trap

During the record-setting IPO years, a significant portion of money raised through Indian IPOs came via OFS components rather than fresh equity issuance.

That means the shares sold already existed.

No new capital creation.

No direct business expansion funding.

Just ownership transfer.

In several heavily marketed IPOs between 2021 and 2024, insiders used euphoric market conditions to monetise years of private-market valuation inflation.

Retail investors applying in HNI and individual categories often assumed they were participating in the next phase of corporate growth.

Instead, they were financing an exit strategy.

The math becomes brutal when viewed honestly.

If a company raises ₹10,000 crore but most of that money goes to existing investors selling shares, the business itself may receive only a fraction of the headline capital raised.

Yet the valuation burden still falls entirely on new public shareholders.

That distortion matters because future stock returns depend on future business cash flows — not on how efficiently early investors exited.

This is one of the least discussed structural flaws in India’s IPO ecosystem.

2. Growth-At-All-Costs Unit Economics

The second flaw was the illusion of subsidised growth.

Many venture-backed startups spent years artificially boosting demand through discounts, cashback campaigns, free delivery, and aggressive customer acquisition subsidies.

In private markets, this was rewarded.

Higher GMV.

Higher app downloads.

Higher monthly active users.

Higher valuation rounds.

But public markets eventually ask a different question:

What happens when subsidies stop?

That was the calculation many retail investors never did.

Because once discount intensity declines, true demand elasticity becomes visible.

Customer retention weakens.

Order frequency slows.

Margins compress.

Growth normalises.

The public-market investor then discovers that headline revenue growth was partly manufactured through unsustainable capital burn.

Several high-profile IPOs from the startup era faced exactly this transition after listing.

The business itself may still survive and even improve operationally. But if the IPO valuation already assumed years of hypergrowth, even moderate slowdowns became devastating for shareholders.

3. The Anchor-to-Retail Markup

The final flaw was the markup gap between institutional entry pricing and retail participation pricing.

Anchor investors and private-market participants frequently entered businesses at dramatically lower valuations long before listing day.

By the time retail investors received IPO allocations, valuations had already compounded through multiple funding rounds and narrative-driven repricing cycles.

The final public issue price often embedded years of expected future growth before the company even listed.

This created a structurally asymmetric setup:

• Private capital captured early-stage upside
• Institutional investors received preferential access
• Retail investors absorbed peak optimism pricing

Grey market premiums worsened the distortion further.

As listing-day excitement intensified, retail demand increasingly became disconnected from valuation reality.

Many investors stopped evaluating businesses.

They started chasing momentum.

That shift transformed IPO participation into speculative behaviour rather than disciplined capital allocation.

The Resulting Wealth Erosion

The aftermath has been severe.

Over half of the heavily publicised technology and startup IPOs from the boom years consistently traded below their issue prices.

Studies tracking nearly 200 IPOs launched between 2024 and early 2026 showed only a relatively small fraction sustaining meaningful long-term positive returns.

Meanwhile, broader market corrections repeatedly erased tens of thousands of crores in market capitalisation from high-profile post-2021 listings within days.

The damage was not caused by one bad company.

It was caused by a system where valuation expectations detached from mathematical reality.

That is the core lesson retail investors must understand before the next IPO cycle begins.

The Exceptions Prove the Rule

Not every IPO failed.

But the winners were usually priced with restraint.

Businesses that delivered strong post-listing returns generally had at least three characteristics:

• Reasonable revenue multiples
• Clear profitability visibility
• Lower narrative premium

These companies often lacked headline glamour compared to venture-backed internet names. They were sometimes industrial, manufacturing, or niche sector businesses with understandable cash flows.

Ironically, boring businesses often became better investments because expectations remained realistic.

That is the hidden lesson from the last four years.

Investors consistently overpaid for excitement and underappreciated valuation mathematics.

A company growing revenue at 25% annually cannot sustainably justify 70x or 80x sales multiples forever.

Eventually, the stock price must reconnect with business fundamentals.

When that happens, late-stage IPO buyers absorb the damage.

Now Comes Zepto — And The Cycle Begins Again

SEBI has now cleared six fresh IPOs, including Zepto, Dhoot Transmission, Horizon Industrial Parks, Surgiwear, Crystal Crop Protection, and Hotel Polo Towers.

The market narrative around Zepto is already familiar.

Fast growth.

Massive addressable market.

Consumer disruption.

Category leadership.

But investors should ask a far more important question:

At the expected valuation, what growth is required just to justify buying today?

Reports suggest Zepto may target an IPO size around ₹11,000 crore to ₹12,000 crore.

If public investors eventually value the company at aggressive revenue multiples similar to earlier internet IPOs, then buyers are again assuming extraordinary future execution.

Not good execution.

Extraordinary execution.

That means:

• Sustained high growth despite rising competition
• Improving unit economics
• Long-term margin expansion
• Capital efficiency
• Reduced cash burn
• Defensible market leadership

Missing even one variable can dramatically alter future returns.

And that is before considering macro risks, consumer slowdowns, or regulatory changes.

The same framework applies to every upcoming IPO.

Not “Is this company exciting?”

Not “Will listing gains happen?”

The real question is:

“What assumptions are already embedded in this price?”

Because if the embedded assumptions already require perfection, investors are not buying opportunity.

They are buying expectation risk.

What Investors Should Actually Do

The answer is not to avoid IPOs entirely.

The answer is to stop evaluating IPOs emotionally.

Before applying for any IPO, investors should ask four questions:

1. What revenue growth is required to justify this valuation?
2. Is that growth rate realistically achievable for five years?
3. Does the company have operating leverage or just narrative momentum?
4. Are existing investors selling aggressively into the IPO?

Most importantly, compare the IPO valuation with already-listed peers.

If the IPO demands future perfection while listed competitors trade at lower multiples with proven profitability, the risk is obvious.

India’s IPO market does not have a company-quality problem.

It has a pricing problem.

And until retail investors start doing the math before subscribing, the cycle will keep repeating.

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