Performance of Recent IPOs: What’s the Reality vs Hype?
In the last few years, India has seen a big wave of IPOs — from startups to established companies — all rushing to raise funds from the public. Every time a new IPO hits the market, social media, news platforms, and investors start buzzing with excitement. But if we look closely, not every IPO story ends with profit. Some perform well, while others fail to live up to the hype.
Let’s understand what’s really happening behind the “IPO hype” and how investors should look at it.
1. The IPO Hype — What Creates It
When a company announces its IPO, there’s a flood of marketing — media interviews, advertisements, and influencer discussions. The goal is to attract retail investors. Terms like “oversubscribed,” “record-breaking demand,” or “strong listing expected” make investors feel they’re missing out if they don’t invest.
For example, the Zomato IPO (2021) was oversubscribed more than 38 times. The listing day gave nearly 50% profit, and many investors celebrated. But after a few months, the price dropped almost 60% from its peak as the company continued to post losses. This shows that initial hype can drive prices up, but long-term performance depends on real business strength.
2. Reality Check — How IPOs Perform After Listing
According to a report by EY India (Q1 2025), over 60% of the IPOs launched in the last two years saw good listing gains, but nearly half of them lost value within six months of trading.
Another data point from ICICI Direct shows that while companies like Kaynes Technology, Cyient DLM, and Tata Technologies delivered strong post-listing performance, others like Paytm, Nykaa, and Delhivery failed to maintain their listing-day prices.
Let’s take a few quick examples:
Paytm IPO (2021) — India’s biggest IPO at that time, launched at ₹2,150 per share. It was overhyped with massive media attention. But soon after listing, it crashed by over 25% on the first day and went down more than 70% in a few months. The company’s unclear profitability model scared investors.
Tata Technologies IPO (2023) — A strong performer backed by the trusted Tata brand. It opened with a 140% premium and continued to perform well in the secondary market because of solid fundamentals and growth visibility in engineering services.
Honasa Consumer (Mamaearth) — Initially got mixed reviews but listed with gains. However, market analysts later pointed out that the company’s valuation was stretched compared to its earnings, which led to price corrections later.
These examples clearly show that while some IPOs are worth the buzz, many struggle once the excitement fades.
3. Why Many IPOs Underperform
There are a few main reasons why IPOs lose their shine after listing:
Overvaluation: Many companies set high issue prices based on market enthusiasm rather than real profit numbers. When investors realize the earnings don’t match the valuation, the price drops.
Short-Term Traders: Many investors buy IPOs just for listing-day profit and sell immediately, creating selling pressure.
Weak Fundamentals: Loss-making companies often rely on brand name and growth potential to attract investors, but without profits, sustaining high valuations is hard.
Market Sentiment: Global or domestic market conditions also impact IPO performance. If markets are volatile, even strong IPOs can face declines.
4. What Smart Investors Should Do
Before investing in any IPO, focus on data, not noise. Here’s what you should always check:
Company Financials: Look for consistent revenue growth and profit.
Debt Levels: High debt is a red flag, especially in rising interest rate environments.
Valuation vs Peers: Compare the company’s price-to-earnings (P/E) ratio with competitors.
Use of Funds: See where the company plans to use IPO money — for growth, debt repayment, or just to sell promoter shares.
Management Quality: Good leadership often translates into long-term stability.
For example, investors who studied the fundamentals of Tata Technologies noticed its strong financials and real profits before investing. Those who only followed the hype in Paytm faced heavy losses.
5. The Final Reality
In simple words, not all IPOs are golden opportunities. Some are excellent long-term investments; others are driven by short-term excitement. An IPO is not a quick-profit scheme but an entry point into a company’s journey.
The hype might give you listing-day profit, but reality is seen in 6–12 months of performance. If the company continues to grow in sales, profits, and market presence, your investment can multiply. If not, the price will fall no matter how strong the initial buzz was.
So, the next time you see a trending IPO, take a step back. Read the company’s red herring prospectus (RHP), check financials, and make an informed decision.
In the end, investing in IPOs should be guided by research, not fear of missing out (FOMO).