The IPO market in India is currently booming, with dozens of issues opening every month across both the mainboard and SME segments. IPOs always grab the spotlight among retail investors, who often believe they can earn significant profits within a few days of listing.
Take the recent LG Electronics IPO, for example, which debuted with a nearly 50% premium. However, a recent report on retail participation in IPOs challenges this common perception and reveals insights that could change how investors view IPOs.
Let’s dive into this report and uncover the real story behind these trends.
What’s Happening?
Retail participation in IPOs has slowed compared to last year. As reported by The Financial Express, the average subscription for the retail quota of 75 companies listed in 2025 is 26.99 times, down from 33.71 times for 91 companies in 2024, according to data from Prime Database. Listing gains have also declined sharply.
In 2025, the average gain at the time of listing stands at just 8.41%, compared to 29% last year and 27% in 2023. In the first 10 days of October, six out of 10 companies offered either no returns or posted losses of up to 39% on listing. Only a few companies such as Urban Company, Highway Infrastructure, and GNG Electronics have seen strong listing gains of 56.31%, 67%, and 48%, respectively.
Meanwhile, LG Electronics listed with nearly 50% gains, while the much-awaited Tata Capital IPO disappointed investors with a modest premium of just 1.23%.
Looking Beyond Listing Gains
According to Bernstein, IPOs listed over the past 21 months, excluding listing gains, have delivered an average return of only 4%, with more than half posting negative returns. This highlights the underlying weakness in secondary markets, especially since the latter half of last year when most of these IPOs took place.
Over the last six months, however, these stocks have outperformed the Nifty 50, rising 19% compared to the Nifty’s 7%. Interestingly, this outperformance is largely driven by just 12 high-performing IPOs, nine of which have gained over 100% since listing.
About one-fourth of IPOs have delivered zero or negative listing gains. Only 18% gained more than 40%, while 12% saw returns between 25% and 40%.
Interestingly, FII outflows have tended to spike during periods of heavy IPO activity, suggesting that institutional investors often exit these stocks soon after listing rather than holding them long-term in secondary markets.
India’s Strong Position in Global IPOs
Despite modest performance when excluding listing gains, India ranks fourth globally in IPO fundraising this year. The US leads with $53 billion, followed by Hong Kong at $23 billion and China at $16 billion. India, with $14 billion, stands just behind these major markets.
The Indian IPO market has been robust in recent months. If this pace continues, India could match last year’s total of over $20 billion raised.
The report also challenges the notion that tech start-ups dominate IPOs. In reality, most listings come from traditional sectors, with industrials leading the way, while new-age businesses account for only about 16% of all IPOs.
What Does This Mean for Investors?
The current IPO landscape shows that chasing listing gains alone may not be a reliable strategy. The average listing gain in 2025 is just 8.41%, compared to 29% last year. Moreover, excluding listing gains, more than half of the stocks listed have delivered negative returns.
The report further highlights that smaller IPOs tend to deliver better listing performance. IPOs raising less than $20 million have delivered nearly 40% gains, those in the $20–40 million range have returned 31%, while the largest IPOs, over $1 billion, have been the least rewarding, averaging around 9% gains.
Additionally, institutional participation patterns suggest short-term trading behaviour rather than long-term conviction. Overall, investors should focus on thorough research, realistic expectations, and long-term value creation instead of relying solely on short-term listing gains or market hype.
What’s Next?
The Indian IPO market is expected to remain active and closely watched in the coming months. Despite the mixed performance, India’s IPO pipeline remains strong, signalling growing investor appetite and a maturing market that continues to attract both domestic and global attention.
Traditional sectors, especially industrials and BFSI, are likely to dominate upcoming listings, while new-age fintech and consumer tech companies are gradually increasing their presence.
Additionally, ICICI Prudential Asset Management and Groww’s parent company, Billionbrains Garage Ventures, are expected to hit the market soon after Tata Capital.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
