The Indian IPO market has witnessed a significant reality check, with almost half of the new listings trading below their issue prices, despite initial strong momentum. This trend highlights the importance of careful stock selection and thorough research before investing in newly listed companies.

IPO Market Overview

The IPO market in India has seen a flurry of activity, with 103 companies going public in 2023. However, the performance of these newly listed stocks presents a mixed picture:

Market Differentiation

Despite the challenging performance of many IPOs, the market is showing clear signs of quality differentiation. This suggests that investors are becoming more discerning, focusing on companies with strong fundamentals and growth prospects rather than getting caught up in the initial IPO hype.

Investor Implications

Careful Selection

The current market scenario underscores the need for investors to carefully evaluate each IPO on its merits, rather than assuming all new listings will perform well.

Long-term Perspective

While short-term performance may be disappointing for some IPOs, it's important for investors to maintain a long-term perspective when investing in newly listed companies.

Market Sentiment

The fact that over half of the IPOs are still trading above their issue prices indicates that there is still appetite for quality offerings in the market.

Record Fundraising

Despite the mixed performance, mainboard IPOs have raised a record ₹1.75 lakh crore, highlighting the continued importance of public markets for corporate fundraising.

Conclusion

The current state of the IPO market serves as a reminder that not all public offerings are created equal. While the IPO route remains an attractive option for companies to raise capital, investors need to be more selective and thorough in their approach to IPO investments. As the market continues to evolve, it's likely that we'll see a greater emphasis on quality and fundamentals in future listings.

India's primary market experienced unprecedented activity in 2025, but the initial euphoria has given way to a sobering reality check. Of the 103 companies that debuted on the stock exchanges this year, nearly half are now trading below their initial public offering prices, highlighting a significant disconnect between listing-day enthusiasm and sustained investor interest.

Market Performance Overview

The performance data reveals a stark contrast between initial momentum and long-term sustainability. While 69 companies listed above their IPO prices and only 33 opened below, the situation has reversed significantly by year-end.

Record Fundraising Achievement

Despite the mixed post-listing performance, 2025 marked a historic year for equity capital mobilization. Mainboard IPOs raised an unprecedented ₹1.75 lakh crore, representing the highest level of equity capital mobilization on record. Additionally, 267 companies raised ₹11,429 crore on the small and medium enterprises platform, demonstrating robust activity across market segments.

Size Matters: Performance Correlation

A clear pattern has emerged linking IPO size to post-listing performance. The 10 biggest laggards among market debutants have been companies with IPO sizes below ₹1,000 crore, with several stocks declining between 30% and over 50% from their IPO levels.

Notable Underperformers:

Strong Performers:

Conversely, six of the top-performing companies have IPO sizes exceeding ₹1,000 crore. Meesho, which raised ₹5,421 crore, trades over 78% above its issue price. Billionbrains Garage Ventures, Groww's parent company, raised ₹6,632 crore and currently trades 65% above its issue price.

Top Gainers Leading the Pack

Several companies have delivered exceptional returns to investors, demonstrating that quality businesses can sustain premium valuations post-listing.

Market Differentiation and Expert Insights

Market experts note a growing sophistication in investor behavior, with the market increasingly differentiating between quality businesses and hype-driven offerings. Dev Chandrasekhar, partner at Transcendum, observes that many big-name IPOs experienced strong initial enthusiasm but failed to sustain valuations post-listing. Without fresh capital for growth initiatives, these companies must rely entirely on operational improvements to justify premium valuations.

Ganesh Jagdishen, chief executive of Plutus Global, emphasizes that the market is beginning to separate quality from hype. The disconnect between listing gains and sustained performance suggests that market pricing is often driven by sentiment rather than fundamentals. For 2026, the challenge will be identifying the right IPOs for investment, particularly in a rising interest rate environment where growth capital becomes expensive.