Investors Weary? 18 Of Top 30 IPOs Fail To Outperform Market, Finds Capitalmind
Reliance Power, LIC and Paytm were among the underperformers, whereas Zomato is one stock that has outperformed the Nifty 500.
Initial public offerings from Reliance Power Ltd., Life Insurance Corp., and Paytm’s parent company One 97 Communications Ltd. are among 18 of the top 30 IPOs by size that have failed to outperform the CNX500 (Nifty 500) index.
An analysis by Capitalmind Financial Services found that investors who bought shares at the IPO price saw underwhelming returns compared to the broader market, even assuming they reinvested dividends.
Reliance Power, which was once India's largest IPO, delivered significant negative returns. It stood out as one of the worst performers.
Of the 30 largest IPOs, eight have generated negative returns overall, while only two in the top 10—Zomato and Coal India—produced returns that exceeded the CNX500 index. Zomato, in particular, delivered substantial excess returns, emerging as one of the few bright spots.
Newer IPOs launched over the past two years, like Bajaj Housing Finance Ltd. and Bharti Hexacom Ltd., have performed well due to favourable market conditions.
Among the broader top 30, other winners include Hindustan Aeronautics Ltd., Indian Railway Finance Corp., and Sona BLW Precision Forgings Ltd.
“Big IPOs often struggle to deliver excess returns due to high valuations in bull markets. When earnings fail to justify these valuations and the broader market corrects, high-profile IPOs fall short of expectations,” said Anoop Vijaykumar, head of research at Capitalmind Financial Services.
In 2024, consumer companies have led the charge in fundraising, accounting for 34% of funds raised, surpassing financials, which contributed 27%. Industrials followed at 14%. This shift marks a changing trend in the sectors dominating IPO activity this year.
In fiscal 2025, some of the much-anticipated mainboard offers were of Bajaj Housing Finance Ltd., Ola Electric Mobility Ltd. and Hyundai Motor India Ltd. Most IPOs were also oversubscribed this year.
The IPO craze has been so much that SEBI, the market regulator, even urged the BSE and the NSE to tighten due diligence on merchant bankers involved in SME IPOs. This is because SEBI saw lax enforcement in clearing several SME IPOs and expressed concerns about certain companies' unrealistic claims.
