In recent months, India’s primary market has witnessed a surge in Initial Public Offerings (IPOs), with enthusiastic retail and institutional investor participation. However, this robust demand in the subscription phase is not always leading to strong listing-day performance. The disconnect between IPO hype and actual returns is raising questions among investors about the true health of the IPO ecosystem in 2025.
Record IPO Participation in 2025 So Far
As per NSE and BSE data, over ₹30,000 crore has been raised through IPOs in the first half of 2025, including mega issues like:
- Emcure Pharmaceuticals (₹1,952 crore),
- Allied Blenders and Distillers (₹1,500 crore),
- Asirvad Micro Finance (₹1,500 crore),
- JNK India, and
- Vraj Iron and Steel, among others.
Retail and High Net-Worth Individuals (HNIs) have subscribed several IPOs multiple times over. Some issues even witnessed oversubscription of 30x to 100x in certain categories, driven by the promise of quick gains, optimistic sector outlooks, and better liquidity in Indian equity markets post-election stability.
But Why Are Listing Gains Disappointing?
Despite strong subscription figures, many IPOs have failed to deliver double-digit listing gains, or even traded flat or in red on debut. For example:
- Allied Blenders listed at just 6% over issue price.
- Vraj Iron & Steel saw minimal listing pop despite over 100x HNI subscription.
- JNK India listed with moderate gains and corrected soon after.
Even Emcure Pharmaceuticals, though it saw a decent 31% listing gain, is now facing selling pressure post-listing as investors begin to re-evaluate valuations.
Key Reasons Behind This Disconnect
1. Overvaluation Concerns
Many IPO-bound companies are pricing their shares aggressively. Investment bankers and promoters often aim to maximize proceeds during bull markets. However, high valuations with limited near-term earnings visibility have led to cautious post-listing performance.
2. Short-Term Speculation by HNIs
The surge in HNI and QIB (Qualified Institutional Buyers) subscription is often due to leveraged bets on listing gains. When these bets unwind immediately after listing, it leads to price pressure, reducing any sustained rally.
3. Sectoral Fatigue
Sectors like pharma, specialty chemicals, and financial services have dominated recent IPOs. However, investor interest has started to diversify, and sector fatigue is affecting performance, especially for companies without a clear differentiation.
4. Macroeconomic Uncertainty
Despite election-led market optimism, global concerns—such as U.S. interest rates, China slowdown, and oil price volatility—are making investors wary of holding newly listed stocks for the long term.
What Should Investors Do?
📌 Focus on Fundamentals
Avoid IPOs based only on hype or grey market premium (GMP). Evaluate the company’s business model, profitability, sector outlook, and debt levels before applying.
📌 Read Red Herring Prospectus (RHP)
The RHP includes crucial insights like promoter background, litigation, risks, and peer comparisons. Skipping this document can lead to investment decisions based on incomplete information.
📌 Long-Term View Is Better Than Listing Gains
Some of the best-performing IPOs like Nykaa and MapmyIndia in the past initially corrected after listing but offered significant long-term gains to patient investors. Think beyond Day 1.
Regulatory and Market Reactions
SEBI and stock exchanges are monitoring post-IPO performance and may consider stricter scrutiny on pricing mechanisms. Analysts are also recommending that companies strike a better balance between valuations and investor expectations to ensure a healthy IPO ecosystem.
Meanwhile, brokerages like ICICI Direct and Axis Securities are encouraging clients to be selective. “Only 4 out of the 10 IPOs in Q2 2025 gave returns exceeding 10% on listing. Investors must not confuse high oversubscription with guaranteed profit,” said a recent note from Motilal Oswal.
Conclusion
The IPO boom in India is a sign of confidence in capital markets, but investors must tread carefully. Robust participation doesn’t always guarantee strong returns. In 2025, smart investing means blending enthusiasm with due diligence. While the primary market remains an exciting opportunity, understanding company fundamentals, sector trends, and valuation metrics is key to avoiding disappointment.

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