Share Market News / These IPOs came with a lot of fanfare, now they are sinking investors' money!

Share Market News: Nowadays, every day a new IPO (Initial Public Offering) is being launched in the Indian stock market. These IPOs start with a bang, and the share prices skyrocket on the day of listing. An atmosphere of enthusiasm is created among the investors, but this shine does not last long. After a few days, many stocks start falling, dashing the hopes of investors. A recent report by Multi Family Office Client Associates reveals this 'IPO flop game'. This report states that most of the new-age companies listed in the last few years have disappointed investors.

Shocking figures: Only 36% companies were able to give better returns

According to the report, out of the 25 new-age companies listed in the Indian stock market between May 2020 and June 2025, only 36% were able to give positive alpha (better performance than the BSE 500 index) in the long term. That is, 6 out of 10 companies put investors' money at risk and disappointed. This figure is a warning to investors who invest attracted by the initial shine of the IPO.

The report also states that the lock-in expiry period of six months after the IPO was the best time for investors. During this time 52% of the companies were able to give positive returns. But even among pre-IPO investors, only 43% were able to make a profit, which shows that pre-IPO investment is also not free from risk.

Initial enthusiasm and subsequent loss

IPOs launched between 2020 and 2025 received an average subscription of 48.5 times. This means that the demand for shares was so high that their prices rose sharply on the day of listing. About 68% of IPOs showed an average gain of 24% on the first day, which boosted the enthusiasm of investors. But this boom did not last long. In the long term, only 36% of the companies were able to give satisfactory returns to the investors. In many cases, the listing price itself proved to be the highest price of the company's stock, and after that the decline started.

The report specifically examined 10 IPOs with retail frenzy, in which names like Zomato, Policy Bazaar and ixigo performed well. But big names like Paytm, Ola Electric and Mobikwik proved to be disappointing for investors. In these 10 IPOs, pre-IPO investors suffered an average loss of 5%, while IPO and post-IPO investors suffered losses of up to 6% and 25%, respectively.

The right business model leads to success

The biggest lesson of the Client Associates report is that only those companies were able to benefit investors in the long run, which had a clean and scalable business model. Companies that were making profits and had the potential to grow their business were able to withstand the market volatility better. Especially capital-light companies like Zomato and Nazara performed well. At the same time, companies with high expenses faced difficulties.

The report also states that in 2020-21, when there was both a large crowd of retail investors and money in the market, IPO prices were skyrocketing. But in 2024-25, the market's focus has now shifted to profits, cash flow and corporate governance.

Advice for investors

• Do due diligence: Before investing in an IPO, thoroughly check the company's business model, profit potential and management quality.
• Long-term view: Don't go by the initial shine. Invest only in companies that last for a long time.
• Risk assessment: There is risk in both pre-IPO and post-IPO investments. Understand your risk appetite.
• Diversification: Divide your investments across different sectors and companies so that the impact of poor performance of one company is reduced.