Rush How To Steer Your IPO Journey

The primary market is buzzing, defying volatility and rewriting records. After nearly 17 years, the number of mainboard initial public offers (IPOs) in a single year has crossed the 100 mark, showing growing investor appetite in the capital markets. Before this, the year 2007 recorded around 100 issues that together raised Rs 34,179 crore.

What makes the current cycle far more significant is the scale of capital mobilisation. While the number of IPOs may mirror the 2007 peak, the amount raised in 2025 is nearly six times higher, at close to Rs 2 lakh crore. This sharp jump is not just about higher valuations but also the growing maturity of Indian businesses, stronger balance sheets, and increased participation from both retail and domestic institutional investors.

Significantly, strong investor appetite has been observed for the second year in a row. In 2024, 91 IPOs hit the market and garnered around Rs 1.60 lakh crore.

“For the first time in over three decades of data tracking, the primary market has delivered back-to-back all-time highs. Given the size of the Indian economy and the breadth of its business ecosystem, a sustained IPO pipeline is a positive development,” says Pranav Haldea, managing director, Prime database.

In 2025, LG Electronics India and ICICI Prudential Asset Management Company received 6.5 million and 5.5 million applications, respectively, placing them among the top seven most-subscribed IPOs in India by number of applications.

This surge in investor participation in the primary market, proved by oversubscription and the number of applicants, is despite persistent volatility in the equity market due to global trade tensions, geopolitical uncertainties, weaker currency, and shifting capital flows.

Market experts believe that such external disruptions have become the new normal. “Investors increasingly view geopolitical risk as part of the ‘new normal’; it’s no longer a singular shock but a persistent backdrop to market dynamics,” writes George Chan, global IPO leader, EY, in his report, EY Global IPO Trends, released in December 2025.

Sectoral trends reveal broad-based participation across industries. Technology and fintech companies, particularly non-banking financial companies (NBFCs) and digital platforms, have dominated the larger IPOs by proceeds. However, most public issues came from the manufacturing space, with 31 companies tapping the primary market so far in 2025. This was closely followed by the pharmaceutical and healthcare space and the financial services space, where 11 companies each raised funds through IPOs. Capital expenditure-heavy niches such as renewable energy and engineering, procurement, and construction (EPC), realty and infrastructure sectors saw six companies and eight companies, respectively.

A look at the top 10 companies in terms of issue size shows that companies within the financial services space raised the highest amount of money in 2025, with names such as Tata Capital, HDB Financial Services and ICICI Prudential AMC leading the list with issue sizes above the Rs 10,000 crore mark. Notably, they together raised Rs 48,212.1 crore via public issues.

While the IPO rally presents exciting opportunities, investors should not get swept away by it and not give in to common misconceptions. We bust some.

Listing Gains Are Not Guaranteed

As demand for IPOs has increased, investor behaviour has also evolved. One of the key trends that has emerged over the years is the growing tendency among investors to chase quick listing gains. IPOs are increasingly seen as short-term trading opportunities rather than long-term investments.

According to a study by the capital market regulator Securities and Exchange Board of India (Sebi) in 2024, 54 per cent of IPO shares allotted to Investors are sold within a week. “Over the years, IPOs have come to be viewed by many as a shortcut to instant profits, but investors should not treat IPOs like lottery tickets or apply purely for listing gains,” says Shripal Shah, manging director and CEO, Kotak Securities. This mindset can be misleading and damaging.

The true value of an IPO lies in its ability to offer participation in a company’s long-term growth story, and not focus on just a few hours after listing, he adds.

As of December 18, 2025, the IPO market presents a mixed picture that challenges the popular narrative around easy listing gains. Out of 103 IPOs listed during the year, only 50 delivered gains on the listing day, while an equal number closed with losses, underscoring the increasing unpredictability of debut-day performance.

Sixty-six IPOs that came in 2025 are currently trading above their issue price, indicating that longer-term performance has been more resilient than initial market reactions. However, 34 IPOs remain in the red, reminding investors that not every public offering matures into a successful investment.

Grey Market Premiums (GMPs) Are Not Reliable

A common practice is to look at GMPs to estimate listing day gains. GMPs often reflect short-term speculation rather than true value.

Several IPOs in the recent past have proved that. Despite low GMPs, they showed strong post-listing performance. For example, Swiggy’s IPO had a muted GMP before listing, yet the stock rewarded investors handsomely once the company delivered on its business fundamentals.

On the flip side, many investors lost money by chasing IPOs solely based on high GMPs, only to see those premiums vanish before listing or the stock correct sharply after debut.

Remember, a low GMP doesn’t imply a weak IPO, and a high GMP doesn’t guarantee profits. Avoid being misled by short-term noise.

Listing Gains No Barometer For Future Performance

Listing day gains or losses do not guarantee future performance. For example, Ather Energy, which was among the top five best performing IPOs, debuted on May 6, 2025, at around Rs 302, nearly 6 per cent below its issue price of Rs 321. But investors who stayed in it, have doubled their investment. Similarly, Quality Power Electrical Equipments, which listed on February 24, 2025, debuted at around 9 per cent below its issue price, but the stock has since gained about 51 per cent.

On the flip side, Highway Infrastructure, which delivered the highest listing day gain of 72 per cent in 2025, is now trading nearly 19 per cent below its issue price.

The contrasting outcomes suggest a simple truth, short-term market reactions often mislead as they are driven by sentiment and liquidity.

The Real Barometer: Over time, it is the strength of business fundamentals, earnings visibility, and execution capability, not debut-day excitement, that ultimately determines returns.

The growing focus on listing day performance has shifted attention away from business fundamentals toward short-term price action. While a strong debut may generate excitement, it offers little insight into a company’s long-term prospects. History shows that several IPOs with muted or even negative listings have gone on to create substantial wealth for patient investors, while many flashy debuts have struggled to sustain valuations.

Ultimately, wealth creation is driven by compounding of earnings and cash flows over time. Investors who anchor their decisions to intrinsic value rather than listing-day noise are better positioned to benefit from IPOs as long-term investments rather than short-lived speculation.

The Way Forward

India’s capital markets are witnessing strong inflows, largely driven by retail participation through mutual funds and systematic investment plans (SIPs). This steady flow of capital needs a consistent supply of quality companies entering the market.

“Looking ahead, the IPO momentum could continue for the next few years, provided valuations remain reasonable and issuers and bankers resist the temptation to overprice offerings,” says Haldea.

With several companies already approved or in the filing pipeline, supply remains strong. As long as retail inflows into mutual funds continue with no major disruptions, IPO rally is likely to continue.

What Should You Do?

The Short-Term Game: The Sebi 2024 study found that investors are far more likely to sell IPO shares that deliver positive listing gains than those that list at a loss.

“When IPO returns exceeded 20 per cent, individual investors sold as much as 67.6 per cent of their allotted shares by value within a week. In contrast, when returns were negative, only 23.3 per cent of shares by value were sold,” as per the 2024 Sebi study.

Says Haldea: “Greed and fear are fundamental drivers of market behaviour, and data clearly shows that a large section of individual investors enters IPOs primarily in search of listing gains. There is nothing inherently wrong with that approach, provided investors are disciplined about their exit strategy.” If the stock lists at a discount, investors who applied purely for a listing gain should consider exiting on the same day, he adds.

The real problem arises when you continue to hold loss-making IPOs, hoping the price will return to the issue level. That may or may not happen. If you have not done any research or analysis and have applied based only on market chatter, rumours, or GMPs, the investment decision is essentially a short-term trade. In such cases, the exit should be swift if expectations are not met. “The key choice retail investors must make is whether they are entering an IPO to flip their money or to invest for the long term,” says Haldea.

The Long-Term Game: Companies with strong fundamentals, sustainable competitive advantages, prudent capital allocation, and capable management tend to compound earnings over time. In these cases, market noise shouldn't matter.

Patience, discipline, and a fundamentals-driven approach remain key to capturing true value that quality companies deliver over time. Says Shah of Kotak Securities: “Investors should approach IPOs like any long-term equity investment. Study company’s management, business model, promoter background, and financial performance before applying."

For fundamentally strong companies, one can invest partially at the IPO stage and add more post-listing if prices soften, he adds.

IPO hype, listing-day gains, and market chatter should not drive investment decisions. What matters is doing research, understanding the business model, growth prospects, risks, and valuations.

“An IPO should be viewed as an entry point into a business, not a one-day trading opportunity. Evaluating the company’s business model, competitive positioning, management quality, earnings visibility, and capital allocation plans is far more important than tracking GMPs or subscription numbers,” says Haldea.

Remember that an IPO is not the finish line; it is only the beginning of a company’s journey in the stock market. Quality businesses will offer multiple opportunities to enter over time. We have listed 10 stocks recommended by five experts you may consider for 2026 instead of giving in to the IPO rush.

Are OFS Issues Always Bad For Investors?

One of the key discussion points among investors is the growing number of offer for sale (OFS) issues; around 15 per cent of the IPOs in 2025 were OFS. These IPOs, typically, provide exits to existing shareholders, such as promoters and private equity investors, rather than garnering fresh capital for business growth. This leads to the common perception that promoters use the OFS route to “cash out”.

But an OFS is not inherently bad; it is more nuanced.

“For private equity investors, exits are a natural part of the investment cycle. In fact, many high-quality companies with strong fundamentals have come to the market through OFS-heavy IPOs,” says Pranav Haldea, managing director, Prime database. “For investors, an OFS should not be a deal-breaker. An OFS is simply a structure; returns are ultimately driven by fundamentals, not by whether money flows into the company or to selling shareholders.”

What matters more than the OFS tag is why the sale is happening and how much stake promoters continue to hold. Investors should focus on business quality, growth visibility, governance standards, and promoter commitment, adds Haldea.

A substantial post-IPO promoter holding indicates continued skin in the game. Valuation discipline is another key factor—an overpriced OFS can hurt returns, while a reasonably priced one can still deliver long-term value.