About 66% of IPOs listed in the past year now trade below issue price, leaving most investors sitting on losses
When I first started looking at the IPO data for the past twelve months, I was taken aback. Almost two‑thirds of the companies that went public are now trading at a price lower than what we paid for them at the issue. It feels a bit like buying a fresh mango and finding it sour after a few bites – you expected sweet, but got the opposite. This shift has been a wake‑up call for many of us who used to see new listings as quick‑win opportunities.
To put numbers on it, around sixty‑six percent of the IPOs are below their offer price. That means if you bought shares at the issue, you are now looking at a paper loss. Even more striking is that about fifteen companies have slipped by at least fifty percent. Names like Glottis, VMS TMT, Mangal Electrical, Jinkushal Industries and Shree Ram Twistex have seen their market values erode by up to seventy percent. I remember chatting with a colleague last week who had invested in Glottis; he told me he was bewildered seeing the stock tumble so sharply.
This situation is a complete reversal from the recent IPO boom, when every new listing seemed to burst onto the exchange with strong debut gains and then held on to that momentum. Back then, the buzz around fresh issues was almost like the excitement before a cricket final – everyone wanted a piece of the action. Now, that excitement has been replaced by caution, and many are questioning whether the earlier hype was justified.
Market Reset Hits IPOs
Looking at the bigger picture, the market has been under pressure for the last one to one‑and‑a‑half years. It’s not just the IPO space; the whole equity market, especially the mid‑cap and small‑cap segments, has been correcting sharply. Since most of the new listings belong to these segments, they have felt the brunt of the risk‑off mood. I often hear friends on the phone lament that their small‑cap holdings are losing steam while the large‑cap giants seem a little steadier.
Investor behaviour has shifted too. There was a time when we would line up for fresh issues the way people line up for Diwali sweets – eager and hopeful. Today, it feels more like a cautious stroll, with many of us checking the numbers twice before even thinking of subscribing. Analysts are pointing out that investors are now reluctant to chase new listings, especially when the valuations look stretched against a market backdrop that is losing its glow.
In my own experience, I used to treat IPOs almost like a lottery ticket – a quick chance at a big win. But after seeing a few issues struggle post‑listing, I’ve started treating them more like a long‑term investment, if at all. You know, we all have that friend who keeps telling you about the ‘next big thing,’ but now even they are pausing to think before making a move.
Macro Pressures Add to Weakness
The macro environment hasn’t helped either. Geopolitical tensions, especially those simmering in West Asia, have kept markets jittery. Every time there is news about a new conflict or an oil supply disruption, the Indian rupee feels the tremor, and so do the equity markets. With crude oil prices climbing and the rupee weakening, inflation worries have become a regular topic at breakfast tables across the country.
When people talk about inflation, I often hear them mention the rising cost of vegetables and petrol. That same anxiety spills over into the stock market, where investors start moving away from riskier bets – like newly listed companies – and gravitate towards established names that seem safer. It’s like preferring a tried‑and‑tested wheat flour over a new brand of milled rice, just because you trust the old one more when you’re not sure about the new.
Personally, I’ve seen a trend where many of my fellow traders are now looking at large‑cap stocks that offer more stable valuations rather than hunting fresh IPOs. The sentiment is shifting from “let’s try something new” to “let’s hold onto what we know works.”
Valuation Concerns Come to the Fore
One of the biggest issues that has come into focus is valuation. During a bullish market, when liquidity is plenty and optimism runs high, companies can price their shares at a premium and still manage to stay afloat. But once the market corrects, those high valuations often unravel, and the share price slides down to a more realistic level – sometimes much lower than the issue price.
Take the recent listings for example. Even those that saw a strong subscription and a big pop on the day of listing have struggled to keep that momentum alive. Many of them are now trading far below the price at which investors initially bought them. In a few cases, the correction has been so steep that it signals early demand never turned into lasting confidence.
From my perspective, it feels a bit like buying a smartphone at launch price, only to see its value drop dramatically once a newer model arrives. The excitement of the launch does not guarantee long‑term value, and the same lesson is now being taught to IPO investors.
Cooling Demand and Grey Market Signals
Subscription figures also paint a clear picture – the enthusiasm that used to be the hallmark of every new issue is fading. Earlier, almost every IPO was oversubscribed many times over; it felt like a never‑ending queue. Nowadays, many listings are seeing moderate demand, with some barely meeting the minimum subscription levels.
The grey market, which many of us keep an eye on as a proxy for how a stock might perform on listing day, has also turned quieter. Premiums that used to be wide or even in the positive territory have narrowed or turned negative for many fresh issues. This signals a muted sentiment even before the stock actually starts trading.
I recall a few months back when I checked the grey‑market premiums for an upcoming IPO and saw them at a healthy 10‑15 per cent. Fast forward to the recent listings, and many of those premiums have disappeared. It’s like hearing the crowd cheer before a Bollywood release, and then the film gets a lukewarm response at the box office.
Correction, Not Collapse
Most analysts believe that what we are witnessing is a cyclical correction rather than a structural breakdown of the IPO market. The earlier boom was driven by excess liquidity and a strong risk appetite, which allowed companies to command lofty valuations. The current underperformance, therefore, reflects a normalisation of those conditions.
Khushi Mistry of Bonanza Portfolio summed it up nicely by saying the slowdown is linked to weakening risk appetite, with investors focusing more on averaging their existing positions rather than throwing fresh capital into new issues. That resonates with what I’ve seen among my own network – people are now more careful about where they put their money.
On the supply side, companies are also being cautious. A number of firms have postponed or even shelved their IPO plans because they are worried about weak demand and pricing pressure. Uday Patil of PL Capital Markets pointed out that issuer hesitation is largely a function of the current market conditions, not a deeper structural problem. The volatility and valuation worries are simply making it harder to attract investors at attractive prices.
Even though the mood is gloomy now, investment bankers remain hopeful about a bounce‑back. Bhavesh Shah of Equirus Capital believes the slowdown is mainly sentiment‑driven and that activity could pick up once market conditions stabilise and confidence returns. I share that optimism – after all, markets have a habit of swinging back, much like the monsoon after a dry spell.
What Might Come Next?
So, where do we go from here? If history is any guide, the IPO market will likely enter a phase of slower, more measured growth. Companies that do decide to go public will probably adopt more realistic pricing, keeping an eye on the current risk‑off mood. For investors, the lesson seems to be about patience and due diligence – rather than chasing every new issue, we might need to focus on fundamentals and long‑term prospects.
Personally, I’m planning to be more selective. I will look for businesses with solid cash flows, clear growth pathways, and valuations that make sense even if the market remains jittery. It’s a bit like picking vegetables at the market – you check the freshness, the price, and whether it will stay good for a few days, rather than just grabbing the brightest looking one.
In the meantime, keeping an eye on macro trends – oil prices, rupee movements, and geopolitical developments – will continue to be important. Those factors still influence how investors feel about risk, and they will shape the next wave of IPOs. Until then, I’ll keep sharing what I notice, and hopefully we can all navigate this choppy market together.
