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64% of 2021-2024 IPOs fail to beat BSE IPO index returns, says SAMCO Securities

64% of 2021-2024 IPOs fail to beat BSE IPO index returns, says SAMCO Securities

A research note from SAMCO Securities said that nearly 73 per cent or nearly three out of four debutants have underperformed the Nifty Smallcap 250 index.

Pawan Kumar Nahar
Pawan Kumar Nahar
  • Updated Jun 17, 2025 1:31 PM IST
64% of 2021-2024 IPOs fail to beat BSE IPO index returns, says SAMCO SecuritiesThese stocks have been feeling the rub-off the impact of fall in shares of Nvidia recently after the emergence of DeepSeek, a Chinese AI start-up.

At a time when the IPO pipeline is getting crowded and the tap is about to open in the near future, SAMCO Securities, has shared its insights on the IPO performance of the company that made their stock market debut between calendar year (CY) 2021 and 2024. The brokerage highlighted the point that hype does not always mean value.

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According to a report by Motilal Oswal Financial Services (MOSL), over 317 initial public offers (IPOs) collectively raised an unprecedented Rs 1.8 lakh crore in 2024, surpassing the previous record of Rs 1.3 lakh crore in 2021, and significantly outpacing Rs 57,600 billion raised in 2023. Indian corporations raised Rs 59,302 in 2022.

Primary market investors see IPOs as gateways to wealth or make a quick buck. But for many investors, primary market offerings have turned into a trap of hype and hope. From 2021 to 2024, 250 mainboard IPOs hit the market. Yet almost half of them, nearly 48 per cent, are now trading below their listing price.

The worse figures pop up when they are compared with various indices. The research note from SAMCO Securities said that nearly 73 per cent or nearly three out of four debutants have underperformed the Nifty Smallcap 250 index, while 64 per cent or two out of three recently listed player have failed to beat only Nifty50 index, but also BSE IPO index, the gauge for IPOs.

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IPO Research by SAMCO
IPO Research by SAMCO Securities

Commenting on its research SAMCO Securities said that this is the right time to alert the investors about how the IPOs have fared in the last four years and investors have suffered. IPOs have largely become exit routes for promoters, not entry points for investors. The average return since listing is only 38 per cent, which isn’t very exciting considering the risk, it noted.

Companies are selling big dreams at premium valuations, and most listings fade away after the initial buzz. Many investors chase IPOs expecting quick profits. But in reality, most new listings lose steam fast, revealing weak fundamentals behind shiny marketing, said Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities.

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"It is a reality check. Not every IPO is an opportunity. Sometimes, it is just a well-wrapped exit plan. Smart investing means looking beyond the buzz—focusing on business quality, valuation, and long-term growth. Don’t just follow the crowd. Pause, research, and then invest. Caution and due diligence matter more than hype," he said.

India has seen some mammoth IPOs since 2021 including names of Life Insurance Corporation of India (LIC), Adani Wilmar, Hyundai Motor Company, Mankind Pharma, Tata Technologies, JSW Infra, Nuvoco Vistas Corporation, Indian Railway Finance Corporation (IRFC), Vishal Mega Mart, and Bajaj Housing Finance.

Some companies from the new age sectors including One97 Communications (Paytm), Zomato (now Eternal), FSN E-Commerce Ventures (Nykaa), Swiggy, NTPC Green Energy, Premier Energies, Waaree Energies, Ola Electric and IREDA also mobilized funds from the primary market between CY21 and CY24.

Seconding SAMCO's notion, Dharan Shah, Founder at Tradonomy(dot)AI by Jamnadas Virji Group said that the muted IPO performance reflects two key factors- elevated valuations at issuance and weaker-than-expected earnings delivery post-listing. In the last 2–3 years, many IPOs were priced aggressively, banking on sentiment rather than fundamentals.

"Meanwhile, volatile markets and rising rates compressed valuations across sectors. Without consistent earnings support, such stocks struggled to sustain listing gains. Going forward, selectivity and realistic pricing will be critical for better IPO outcomes, both for issuers and investors" he said.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Jun 17, 2025 11:37 AM IST
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