Retail investors have emerged as the biggest losers in India’s new-age IPO boom, a new study by Client Associates has revealed.
The analysis, covering 25 IPOs between May 2020 and June 2025, highlights that while hype and oversubscription drove strong listing gains, long-term returns have been disappointing.
Key Findings of the Study
- IPO Investors: Only 9 out of 25 IPOs created alpha over the BSE 500.
- Post-listing Buyers: Fared even worse — only 8 IPOs outperformed the index. Average return since listing stood at -3% CAGR, compared with the benchmark’s positive trend.
- Retail Frenzy Subset (10 stocks including Paytm, Ola Electric, Swiggy, Mobikwik, CarTrade, and FirstCry):
- IPO investors gained just 2% on average.
- Post-IPO buyers lost 16%, underperforming the index by 25 percentage points.
- Even pre-IPO investors exiting after the lock-in period recorded -5% returns.
By contrast, the broader 25-stock universe showed relatively better performance:
- Pre-IPO investors exiting at lock-in expiry: +45% returns (+32% alpha).
- Long-term holders: +17% returns (+4% alpha).
- IPO investors overall: +12% returns (+1% alpha).
“The indiscriminate rush to buy pre-IPO shares has not been a smart strategy. The retail frenzy subset substantially underperformed,” said Sarin of Client Associates.
Winners and Losers
- Nykaa: Gave a staggering +320% return at lock-in expiry but now trades below issue price (-3.9%).
- Paytm: Lost 67% by the lock-in period and remains -22% from IPO price.
- Ixigo: A rare standout, doubling investor wealth (+101% in one year) thanks to profitability and scale.
- Swiggy & Ola Electric: Still deep in the red within a year of listing.
The Listing Gain Mirage
- 68% of IPOs delivered positive listing gains, averaging 24%.
- Big pops included Unicommerce (+113%) and IdeaForge (+94%).
- But these gains were short-lived — “Most listing gains proved unsustainable, with stocks correcting sharply once the euphoria faded,” Sarin noted.
- Despite massive 48.5x average oversubscription, only one-third of IPOs beat the benchmark over time.
Sectoral Performance
- Outperformers: Tech-enabled, asset-light businesses with monetisation models — Zomato, Nazara Technologies, PolicyBazaar, Ixigo, Awfis, Zaggle, Blackbuck.
- Underperformers: Capital-heavy or cash-burning plays — Ola Electric, Paytm, Mobikwik, Swiggy, FirstCry.
OFS Myth Busted
Contrary to common belief, IPOs with high Offer-for-Sale (OFS) did not necessarily underperform.
- Ixigo (84% OFS) turned out to be a strong performer.
- Primary-heavy issues like Ola Electric and Mobikwik faltered.
“It is business quality and profitability, not the share-sale mix, that determine long-term success,” the report stated.
The Unlisted Market Mirage
Even “blue-chip” unlisted names like NSE and NSDL disappointed retail investors. Lack of liquidity and opaque price discovery eroded returns.
Some unicorns never even made it to market:
- Byju’s collapsed due to governance issues and cash burn.
- OYO faced repeated delays amid liquidity stress.
- Snapdeal lost relevance against Amazon and Flipkart.
From Hype to Maturity
The 2020-21 IPO cycle rewarded “growth at all costs,” driven by pandemic liquidity and retail enthusiasm. But by 2024-25, the market had matured, rewarding fundamentals like profitability, cash flow visibility, and capital efficiency.
- Zomato swung to profitability and was re-rated.
- PolicyBazaar recovered, posting a 7% PAT margin in FY25.
- Nazara scaled steadily with consistent profits.
“The era of irrational valuations based purely on growth is behind us. The market has matured into a fundamentals-driven environment. The real risk for retail investors lies not in missing the hype, but in getting caught in it,” Sarin cautioned.
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