IPO Listing Returns Plummet 68% in 2025 as Retail Investors Face Growing Challenges
IPO listing returns dropped 68% in 2025, with average gains of 9.55% underperforming the Nifty 50's 10.5% return. Experienced investors are avoiding IPOs due to declining profitability and increased competition for allotments. Cautionary examples like Paytm, which fell 27% on listing day, highlight significant risks, while behavioral studies show investors reluctantly sell losing positions. Financial experts recommend mutual funds or secondary market investments over IPO speculation given current market conditions.
*this image is generated using AI for illustrative purposes only.
The allure of quick profits from IPO listings is losing its shine as retail investors face diminishing returns and mounting challenges in 2025. Average listing gains have plummeted, forcing seasoned market participants to reconsider their strategies and urge newcomers to exercise greater caution.
Sharp Decline in IPO Returns
The numbers paint a stark picture for IPO enthusiasts. According to Prime Database, average returns from IPO listings in 2025 have fallen by 68% compared to the same period in the previous year. An investor purchasing one lot in each mainboard IPO and selling at closing prices on listing day would have achieved an average gain of just 9.55% for the year.
| Performance Metric | 2025 Results |
|---|---|
| Average IPO Listing Gain | 9.55% |
| Nifty 50 Index Return | 10.5% |
| Year-over-Year Decline | 68% |
This performance notably underperformed the Nifty 50 index, which gained 10.5% during the same period, raising questions about the risk-reward proposition of IPO investments.
Experienced Investors Turn Away
Veteran IPO participants are adapting their strategies in response to changing market dynamics. Sekar Maruda Gounder, a 44-year-old data architect from Chennai with 10 years of IPO investing experience, largely avoided IPOs in 2025. "Nowadays profit is low, that's the reason why I'm not doing it," Gounder explained, shifting focus to established listed companies with depressed share prices or those announcing stock splits and bonuses.
Gopal Sharma, a 50-year-old tourist guide who has invested in IPOs since 2008, took a complete break from IPO applications in 2025. His cautious approach stems from hard-learned lessons, particularly his experience with One97 Communications (Paytm), where he remains at a loss despite holding shares since the 2021 listing.
The Paytm Cautionary Tale
The Paytm IPO serves as a sobering reminder of IPO risks, even for market-leading companies. The digital payments platform's IPO was oversubscribed 1.66 times by retail investors and issued at ₹2,150 per share. However, shares fell 27% on listing day to ₹1,564 and continued declining in subsequent months.
| Paytm IPO Details | Figures |
|---|---|
| Issue Price | ₹2,150 |
| Retail Oversubscription | 1.66 times |
| Listing Day Decline | 27% |
| Listing Price | ₹1,564 |
A SEBI study of 144 IPOs between 2021 and 2023 revealed that only 23% of shares by value were sold when returns turned negative, indicating investors' tendency to hold losing positions hoping for recovery.
Reduced Allotment Opportunities
Increasing retail participation has made IPO allotments more challenging to secure. When IPOs are oversubscribed in the retail category, lottery systems ensure maximum distribution, typically limiting successful applicants to just one lot. Even if shares double in value, the absolute gains remain modest due to small allotment sizes.
Timing Risks Persist
Even successful IPO listings can disappoint investors who fail to book profits quickly. LG Electronics India, which listed in October at ₹1,140 per share, gained on listing day to close at ₹1,682.80. However, shares subsequently declined to around ₹1,371, frustrating investors who held expecting further gains.
| LG Electronics IPO Performance | Price |
|---|---|
| Issue Price | ₹1,140 |
| Listing Day Close | ₹1,682.80 |
| Recent Trading Level | ₹1,371 |
Expert Recommendations
Financial advisors increasingly recommend alternative investment approaches over IPO speculation. Krishna Rath, a SEBI-registered investment adviser, estimates that "maybe 20% of the IPOs will make money" in the current environment, advising investors to avoid fear of missing out (FOMO) and focus on careful research and long-term holding strategies.
The consensus among experts favors mutual fund investments or direct secondary market purchases of established companies over IPO gambling, particularly given current high valuations and the apparent end of the recent bull run.
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