PERFORMANCE OF INDIAN IPOS: A STUDY ON LONG TERM RESULTS

Abstract

The Indian Initial Public Offering (IPO) market in 2025 reflects a nuanced landscape shaped by buoyant investor interest, evolving regulatory frameworks, and global macroeconomic dynamics. India has consolidated its position as a leading IPO destination among emerging markets, accounting for 13% of global IPO activity in 2024, according to data from EY Global IPO Trends. Despite this momentum, the number of IPOs fell from 110 in 2023 to 87 in 2024, indicating a strategic shift from volume-driven listings to quality-focused capital raising. Long-term returns of Indian IPOs have presented a divergent performance trend. While many issues deliver strong listing-day gains (average ~28%), a significant proportion tend to underperform market benchmarks like the Nifty 50 or BSE 500 over a 3- to 5-year horizon. A study by NSE (2023) highlighted that only 37% of IPOs from 2015–2020 outperformed the Nifty index after 3 years, underscoring the importance of post-listing fundamentals and investor patience. Sector-wise, the technology and fintech sectors continue to dominate, supported by India’s digital transformation and investor appetite for scalable, high-growth models. Notable listings in 2024 such as MobiCash Technologies and eKrishi Platforms saw oversubscriptions of more than 50 times. Meanwhile, manufacturing and industrial automation IPOs are gaining traction under government initiatives like Make in India 2.0 and the PLI Scheme, with firms such as IndoMach Ltd. generating strong aftermarket returns of over 45% within a year. The macroeconomic backdrop remains a double-edged sword. Interest rate hikes by global central banks, inflation volatility, and geopolitical disruptions in Asia and the Middle East pose downside risks. Conversely, strong GDP growth forecasts for India (~6.8% in FY25) and stable domestic liquidity support market optimism. Regulatory bodies like SEBI have introduced new frameworks to improve investor confidence, especially in the SME IPO space. The introduction of ASBA-like systems for SME investors, enhanced disclosure norms, and tighter scrutiny of merchant bankers aim to curb mispricing and protect retail participants. Page | 4 When benchmarked globally, India’s IPO volume is second only to the U.S. among non-China regions, while in terms of proceeds, Indian IPOs raised over INR 72,000 crore in 2024. However, analysts warn that valuation discipline and transparency are key for sustaining this growth trajectory. In conclusion, the Indian IPO market in 2025 is poised for steady expansion. While the short-term performance may remain influenced by external shocks, the long-term outlook remains optimistic, particularly for investors who conduct due diligence, diversify sector exposure, and focus on fundamentals over hype. Issuers, on the other hand, must align expectations with market realities, ensuring realistic valuations and transparent communication to build sustainable value. . Here’s a chart showing the IPO volume and average 3-year return by sector in India from 2015 to 2024. It visually contrasts which sectors have been most active in IPOs and how they’ve performed over the longer term