India's booming Initial Public Offering market has left many investors disappointed. Over the last two years, since 2024, companies rushed to list on stock exchanges, but only a small fraction delivered lasting value. Out of 198 mainboard IPOs, a mere 35 have provided sustained returns, showing a challenging reality for those seeking quick gains from public market debuts.This trend highlights a significant shift from the market's earlier excitement.[m]
The Harsh Reality for Investors
The numbers paint a clear picture of investor struggles. Since 2024, of the 198 companies that went public, only 64 currently trade above their issue price. Even fewer, just 35, have managed to deliver sustained positive returns to investors.The S&P BSE IPO Index, which tracks the performance of newly listed companies, has dropped by 8% recently.This stark performance contrasts sharply with the widespread enthusiasm that often surrounds new listings. Many retail investors, drawn in by the promise of quick profits, have seen their trust erode due to frequent post-listing losses.This has led many to approach the market with more caution or stay away from new IPOs altogether.[m+4]
Why Many IPOs Fall Short
A primary reason for this underperformance is often aggressive pricing. Companies frequently set their IPO prices very high to raise as much money as possible. This leaves little room for the stock price to grow once it starts trading.When investors realize the share price is too expensive compared to the company's actual earnings, they begin to sell.Ajay Kumar, writing on Medium, explained that if a company with low profits is valued higher than established players in the same industry, its stock will likely struggle after listing.[medium+3]
Weak financials and low profitability also contribute to poor performance. Some companies enter the market without strong profits or stable cash flow, making them risky investments.Many IPOs also get oversubscribed due to significant hype rather than solid business fundamentals.This speculative activity, often fueled by grey market premiums, inflates expectations.However, these expectations are rarely met after the company goes public. Post-IPO, many firms struggle to deliver on their growth promises, showing slower revenue growth, declining profit margins, or delays in using the IPO funds for planned expansions.[medium+6]
Market conditions also play a big role. The stock market has been volatile, with high interest rates and global market weakness affecting investor sentiment.Moreover, some companies are relatively young and in early stages of their business cycles when they decide to go public.This means they often need more time to mature and achieve consistent profitability, which can disappoint investors looking for immediate returns.[medium+1]
A Shifting Market Landscape
India's IPO market experienced a significant boom between 2020 and 2024, with record listings and surging investor confidence.Both 2024 and 2025 were described as "blockbuster years" for IPOs.In 2024 alone, public market exits through IPOs reached $17 billion across 153 deals, a 21% increase from the previous year.However, this momentum started to slow down in 2025, particularly in the fourth quarter.[kotakneo+4]
The market has seen a correction, with valuations for new issues dropping by 25-30% from their peak in 2024.Foreign institutional investors (FIIs) have pulled out capital, adding to market volatility.Retail investor enthusiasm also decreased, with average listing gains falling from 30% in 2024 to just 10% in 2025, signaling investor fatigue.The market for Small and Medium Enterprise (SME) IPOs, once a source of quick multi-bagger returns, is also facing a sharp correction, with many recent listings trading below their issue price.[indiaipo+3]
Despite the challenges, domestic investors have become a strong support for the market. Local investors committed ₹979 billion towards IPOs since the start of 2024, surpassing the ₹790 billion invested by foreign funds. This growing pool of local capital is crucial for maintaining a stable and liquid IPO market.[internationalbanker]
Expert Views and Future Outlook
Industry experts acknowledge the current challenges while also seeing a healthy adjustment. Pranav Haldea, Managing Director of PRIME Database Group, noted that 2025 was an exceptional year, with two consecutive all-time highs in India's IPO history. He observed that this cycle has been different from historical patterns where a peak year is usually followed by a quiet period.
Yatin Singh, CEO of Investment Banking at Emkay Global Financial Services, stated that fundraising activity currently looks "bleak" and may take several quarters to recover. Arpit Jain, Joint Managing Director at Arihant Capital Markets, agreed that the "easy money phase is clearly behind." He believes that while the overall IPO story is not over, the "mad rush" in SME IPOs has certainly ended. Jain added that the current correction is "healthy for the ecosystem" as it exposes companies with weak fundamentals that listed during times of high market excitement.[scanx+1]
Despite the recent moderation, some experts remain optimistic about India's long-term potential. Sudarshan Ramakrishnan of Goldman Sachs Global Banking & Markets described the current market as a "perfect storm" of factors boosting Indian markets. This includes many young companies maturing and a growing number of Indian investors. V. Jayasankar, Managing Director at Kotak Mahindra, predicted that the momentum seen in 2024 and 2025 will continue, leading to several large deals, particularly in the digital and financial services sectors. Jibi Jacob, Head of Equity Capital Markets at Jefferies, also sees an "encouraging" outlook, highlighting India's market depth to handle large public offerings and private equity exits.[m+2]
The Indian IPO market is currently navigating a period of adjustment. While the initial euphoria has faded, leading to fewer outright winners, the underlying strength of domestic capital and a maturing economy suggest that opportunities will still exist for fundamentally strong companies and discerning investors. Investors must now carefully evaluate business models and valuations, moving beyond short-term hype to seek sustainable value.[jefferies]
