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Why big IPOs with strong biddings fail to maintain momentum post listings

Why big IPOs with strong biddings fail to maintain momentum post listings

HDB Financial Services is yet behind some of recently listed names like Bajaj Housing Finance, Waaree Energies, Vishal Mega Mart and more in terms of attracting investor interest.

Pawan Kumar Nahar
Pawan Kumar Nahar
  • Updated Jun 30, 2025 8:05 PM IST
Why big IPOs with strong biddings fail to maintain momentum post listings

HDB Financial Services is set to make its debut at Dalal Street on Wednesday, July 02 and the HDFC Bank Ltd backed Rs 12,500 crore issue garnered a strong investor interest. Despite being booked on 16.69 times, the IPO of HDB Financial Services fetched nearly 46.7 lakh applications, attracting bids worth Rs 1,61,080.71 crore for its Rs 9,131 crore net offering.

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However, in terms of attracting investor interest, HDB Financial Services is yet behind some of recently listed names like Bajaj Housing Finance, Waaree Energies, Vishal Mega Mart and more. These stocks made a strong Dalal Street debut but the euphoria fizzled out soon after listing. Interestingly, their subscription status was much higher than HDB Financial Services.

Bajaj Housing Finance Ltd, which attracted bids worth Rs 3.24 lakh crore and saw more than 89.07 lakh applications submitted for the issue. The Rs 6,560 crore IPO was overall subscribed 67.43 times. It made its stock market debut on September 16, 2024 at Rs 150, a stellar premium of 114 per cent over its issue price of Rs 70. The stock is down 18 per cent from listing price and 35 per cent from its all time high.

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Waaree Energies Ltd attracted over 97.34 lakh applications, amounting to a total of Rs 2.42 lakh crore for its 4,321.44 crore IPO. It issue was overall booked 79.44 times Waaree Energies delivered a listing pop of 69.66 per cent, debuting at Rs 2,550 but the stock is still 20 per cent below its 52-week high at Rs 2947.85, hit in November 2024.

According to market participants, hyped IPOs report has been garnering investors interest on the back of rising demand accounts, craze of IPOs and an opportunity make a quick buck. When the hype evaporates and quarterly results disappoint, some of the stocks crash, marred by selling pressure.

There has been an unprecedented growth in the number of demat accounts during the last five years and vast majority of these newbies do not have much knowledge of stock valuations. They are driven by emotions and hype. During a bull market most listings happen at irrationally high prices, said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

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"Good opportunities come when good stocks with high growth potential correct too much. Eternal and Paytm, particularly, corrected too much, offering good buying opportunities to investors. Smart investors, including HNIs and institutions who bought on sharp corrections are sitting on good profits," he explained his rationale with examples.

Nykaa, which was listed November 2021 at 100 per cent premium over its adjust issue price of Rs 187.5 apeice, is still 50 per cent below its all time high around Rs 416. The issue attracted bids worth Rs 1.54 lakh crore. Premier Energies Ltd, which was subscribed 75 times and fetched bids for Rs 1.5 lakh crore, is down 25 per cent from its all time high of Rs 1,387.10 of December 2024.

Market participant believe that IPOs, with aggressive valuations, may attract investor demand but may fail the litmus test of Dalal Street in terms of their earnings. If the earnings are not supportive, then their premium valuations are hit hard. Also, the increasing trend of GMP also add to the IPO euphoria.

Kranthi Bathini, Director Equity Strategy at Wealthmills Securities majority of the IPOs now a days are fully priced in, and leave little on the table for investors, leading to disappointment in medium term. "Post listing, these stocks face the litmus test of earnings and valuations. If there is a slowdown in their earnings, they will be under scrutiny of the market," he said.

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Mahesh Ojha, AVP of Research at Hensex Securities said that these stocks tend to fall after the anchor lock-in for the issue expires. "If the future for a company is bright, it is fancied by institutional investors. On the other hand, Mediocre performance of these companies is punished hard on Dalal Street," he adds.

Zomato, now know as Eternal Ltd, and Vishal Mega Mart Ltd are two exceptions in theory. Eternal has surged nearly 250 per cent from its IPO price of Rs 76 apeice, while Vishal Mega Mart, just six months old at Dalal Street, hit its 52-week high at Rs 137.80 on June 25. The stock has gained about 77 per cent from its IPO price of Rs 78 apeice. Both issues attracted bids worth Rs 1.60 lakh crore.

Echoing the similar tone, Sourav Choudhary, MD at Raghunath Capital said that High valuations, early profit booking by institutions, and a disconnect between hype and fundamentals often leave retail investors stuck at elevated prices "Not every listing pop turns into a long-term winner. Retailers must stay cautious and focus on business fundamentals, not just the buzz," 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 30, 2025 4:03 PM IST
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