The Indian IPO market, which witnessed robust fund-raising in FY25 with 78 companies going public, has now seen a steep decline in performance, as nearly half of these IPOs have fallen below their issue price. Despite strong listing debuts for many stocks, a sharp market correction and aggressive IPO pricing have erased initial gains.

Out of the 78 IPOs launched in FY25, 34 stocks have fallen below their issue price. Among these, 10 stocks debuted at a discount and remained in the red throughout the year, while 24 initially opened higher but later lost all gains.

Worst-Performing IPOs: Heavy Losses for Several Companies

Among the biggest underperformers, Godavari Biorefineries recorded the steepest fall, trading 58% below its issue price. Other major laggards include:

• Carraro India (-56%)

• Western Carriers India (-56%)

• Saraswati Saree Depot, Tolins Tyres, and Shree Tirupati Balajee Agro Trading (all down 40-50%)

• Akme Fintrade, Ecos India Mobility & Hospitality, Suraksha Diagnostic, and Bazaar Style Retail (down 40-50%)

Additionally, around 10 IPOs that initially saw significant surges after listing are now barely holding onto single-digit gains or have fallen close to their issue price.

Strong Debut, But Gains Erased for Many IPOs

Even IPOs that saw strong listing gains, such as Mamata Machinery, Bajaj Housing Finance, Unicommerce eSolutions, Unimech Aerospace & Manufacturing, and Dee Development Engineers, later lost half or more of their initial gains.

Market analysts suggest that this pattern of IPOs struggling post-listing is a result of overpricing, aggressive valuations, and short-term profit-taking by investors.

Outliers: Stocks That Defied the Market Trend

While most IPOs struggled, a few managed to maintain upward momentum despite the broader market correction. These include:

• KRN Heat Exchanger & Refrigeration

• Bharti Hexacom

• Quadrant Future Tek

• Orient Technologies

These stocks not only listed at a premium but also continued to extend gains, reflecting strong investor confidence in their fundamentals.

IPOs That Turned Around After a Weak Start

Interestingly, six stocks that debuted at a discount or marginally above their issue price have since shown remarkable gains. These include:

• Zinka Logistics

• Sagility India

• Dr Agarwal's Health Care

• Aadhar Housing Finance

• Awfis Space Solutions

• Aventive Hospitality

These companies have managed to rally significantly, indicating that investors are still willing to bet on select IPOs with strong fundamentals.

What’s Driving the IPO Decline? Experts Weigh In

Several market factors have contributed to the decline in IPO performances, including:

• Aggressive Pricing: Many IPOs were overvalued at launch, making it difficult to sustain gains post-listing.

• Retail Investor Behavior: Many retail investors subscribe to IPOs for short-term gains and exit quickly, leading to price drops.

• Post Lock-In Selling Pressure: Institutional investors are often subject to a one-month lock-in period after listing. Once this expires, a flood of shares enters the market, pushing prices down further.

• Market Correction: The broader market selloff since September has negatively impacted IPOs, especially those with high valuations.

Retail Investors Face Challenges in IPO Market

The IPO subscription rate surged from 16x in FY22 to 64x in FY24, indicating strong investor interest. However, this also meant tougher allocations for retail investors and increased volatility in post-listing trading.

Market analysts warn that while IPOs may seem attractive, aggressive pricing and volatile conditions make them riskier than before. Investors are advised to focus on fundamentals rather than short-term listing gains when selecting IPOs for investment.

Outlook: Will the IPO Market Recover?

Despite the recent struggles, market experts believe that the IPO market could see a rebound once market conditions stabilize. Companies with strong growth potential and realistic valuations are expected to perform better in the long run.

For now, investors are urged to be cautious while investing in new listings and carefully analyze company fundamentals before making decisions.

The Current active IPO are Infonative Solutions Limited,Spinaroo Commercial Limited,Retaggio Industries Limited.

The Closed IPOs are  Identixweb Limited.

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