Nearly 38.7 per cent of companies listed in 2024 are currently trading below their issue price, highlighting the risks faced by both retail and institutional investors despite a buoyant IPO market. Out of 75 IPOs launched that year, 29 are in the red.
In contrast, 2025 has shown signs of improvement. Only 8 of the 36 IPOs issued so far this year (22.2 per cent) are trading at a loss, indicating stronger market sentiment and improved pricing discipline.
Va Nagappan, Market Expert, Former President, Hindustan Chamber of Commerce, attributes this turnaround to two key factors. “First, there is excess liquidity chasing a limited set of stocks. Second, while foreign investors have been net sellers in the secondary market, they have emerged as net buyers in IPOs,” he said.
However, experts cautioned against reading too much into high oversubscription levels, often ranging from 100x to 700x in smaller issues, which can create a misleading sense of demand. These IPOs typically have promoter holding of 70-75 per cent, resulting in a thin float that can distort pricing. Investors often assume that oversubscription equates to quality, leading to over-enthusiastic buying or holding.
The 2024 IPO market was marked by sharp extremes. While KRN Heat Exchanger returned 297.5 per cent to date, Le Travenues and Jyoti CNC Auto delivered gains of 191.5 and 185.8 per cent, respectively. Other strong performers included SRM Contractors (162.8 per cent) and Waaree Energies (139.8 per cent).
On the flip side, losses were significant. Popular Vehicles fell 52.8 per cent, while R K Swamy and Sawaswati Saree declined 46 per cent and 44 per cent, respectively.
“Once lock-in periods end, weaker IPOs face selling pressure from pre-IPO investors who entered at discounted prices. Stronger listings sustain demand, but mispriced IPOs often collapse when this selling starts,” Nagappan explained.
So far in 2025, Quality Power El led the gains with a 132.6 per cent, followed by Aditya Infotech (116.9 per cent) and Prostarm Info (110.1 per cent). Losses, though fewer, include Arisinfra Solutions (-28.4 per cent) and Capital Infra (-22.2 per cent).
Experts have also noted a behavioural shift, with more first-time investors entering the fray. Many are treating IPO applications like Systematic Investment Plans (SIPs), often without fully understanding businesses. Analysts warn that this trend could backfire in the event of market volatility.
While 2025’s IPO landscape appears healthier, analysts urge caution. “We cannot call this a rally yet,” Nagappan said. “The real picture will be known after a year, once the pre-IPO selling plays out and we see how new investors react when markets turn.”
Published on September 23, 2025
