Summary of this article
DSP AMC participates selectively in IPO; only 25 per cent IPOs since 2022
New-age IPOs assessed using five deeper questions
Strong outperformance validates disciplined IPO framework
Mutual funds have been betting big on the IPO market. In 2025 (till October), they invested around Rs 22,750 crore in initial public offerings, accounting for nearly 19 per cent of the total Rs 1.22 lakh crore raised from the primary market during the period, according to data from Prime Database. With so much money chasing new listings, the real differentiator is not participation; it is selection.
According to DSP Asset Managers (DSP AMC), not every public issue deserves investor capital. Of the nearly 194 IPOs launched since 2022 (considering those with a pre-IPO market capitalisation of over Rs 2,000 crore), the asset management company invested in 49, that is, around 25 per cent of the total universe.
In a note titled “2025: The Year That Was”, the AMC shares certain parameters on the basis of which it chooses which IPOs are worth investing in. In the note, the AMC argues that what matters is not the number of IPOs invested in, but how those calls play out over time. Across the entire IPO universe since 2022, it says 62 per cent of companies have outperformed the Nifty 500 six months after listing. For the IPOs where DSP AMC invested, 84 per cent delivered outperformance over the same period. DSP AMC attributes this gap to its IPO selection framework.
DSP AMC’s IPO framework for conventional businesses
The AMC notes that many IPO-bound companies have relatively short operating histories, which is why it says that it applies even tighter filters than it would for listed companies. It says it focuses on the following fundamentals:
Scalable business models with long runways
Clear competitive advantages that can withstand disruption
Attractive return ratios or a credible path to achieve them
High-quality management teams
Why do new-age businesses need a different lens?
DSP AMC adds that traditional analysis may not be sufficient for new-age businesses. It points to how the primary market has seen a steady flow of digital-first companies, driven by changing demographics, smartphone penetration, and expanding digital infrastructure. Many of these businesses spend their early years prioritising growth and customer acquisition rather than profitability, which makes them harder to evaluate through conventional metrics.
DSP AMC’s IPO framework for new-age businesses
For such businesses, the AMC says it goes deeper and evaluates IPO candidates through five specific questions given below:
Can this company eventually generate healthy profits?
Are unit economics improving as scale increases?
Is the business model resilient to disruption?
Will return ratios eventually justify the valuations?
Is the management team trustworthy, with a sharp focus on execution?
It adds that founders in the new-age space are increasingly becoming more profit-focused, which it sees as supportive for long-term investing.
Overall, DSP AMC claims its IPO strategy is selective and disciplined, focusing on investing only where it sees long-term value.
