Initial Public Offers – Invest wisely

BLOG 21/2025 DATED 15TH OCTOBER 2025

Initial Public Offers attract investments from all types of investors in India. Some invest in IPOs with an objective to sell the share on listing while some have long term strategy of hold and watch. Recent launch of LG Electronics IPO saw a 48% return on the day 1 of listing, a phenomenal return making the market cap of Indian subsidiary of LG more than the Korean parent company. Let us see the performance of the biggest IPOs launched in India and their performance.

Name	Issue size (Rs in cr)	Subscription (times)	Date of Listing	First day gain	Present return
Hyundai Motors	27858	2.40	22/10/2024	-7.16%	23%
LIC	20557	3.00	17/05/2022	-7.77%	-5%
Paytm	18300	2.00	18/11/2021	-27.40%	-42.10%
Tata Capital	15512	1.95	13/10/2025	1.40%	-1.90%
Coal India	15475	15.00	4/11/2010	39.80%	55.50%
HDB Fin	12500	16.70	2/07/2025	13.60%	0.00%
Reliance Power	11700	73.00	11/2/2008	-17.30%	-84%
LG Elect India	11602	54.00	14/10/2025	48.20%	48.20%
GIC RE	11373	1.35	25/10/2017	-4.10%	-17.30%
Swiggy	11329	3.6	13/11/2024	16.90%	12.90%

Here we can observe that out of the 10 biggest IPOs that has come to Indian market only 4 are giving positive returns while 5 are giving negative returns while 1 is almost on the same price. On opening day also 5 have given positive return and 5 negatives. Hence this remain unconclusive that IPO is a good way to invest in shares or not. Therefore, investors who blindly go for IPOs or big IPOs need to revisit their strategy.

The biggest disaster out of the big IPOs is Reliance Power. Initial listing was a premium of 17% on the opening day but closed 17% down on day one itself. Stock went down to the extent of 84% by now and investors losing their money. Issue was 73 times oversubscribed, shows the hype that was built around the issue. There were a few reasons why stock fell so terribly:

• From 2003 to end of 2007 Sensex saw a jump from 3000 levels to as high as 20000, a return of more than 6 times in 5 years. Such exponential growth gave a belief that equity can give returns at any price.
• Reliance has always been big name, backed by heavy marketing resulted in 73 times oversubscription. Market crashed due to sub-prime crisis and Reliance also bear the load of that.
• The overconfidence can also be seen from the fact that at the time of IPO Reliance Power had no operational plant.

Paytm was another horror in the IPO market with 27% loss on day one itself. Paytm also could not generate the results as expected and later was caught into various regulatory issues.

IPOs in 2025:

Total number of IPOs in 2025       : 78

Positive listing                                    : 51

Negative listing                                 : 27

Highest listing return was by Highway Infrastructure i.e 72%. However, it has come down to around 13% at present.

Though there is no formula for success of IPOs, there are a few points that can be considered as a matter of caution:

1. Promoters of the Company: It should be seen that promoters track record is clear and they are not involved in too many litigations.
2. Sudden jump in performance: Check 3-4 years financials, company should be consistent in performance. Only one-year improved performance may be ignored.
3. Purpose of the issue: There are broadly 3 purposes a) Fresh issue of shares b) To repay the debts c) Offer for sale. Fresh issue is always better as the entire money will go to fund the business and should result in growth. In offer for sale the investment goes into the pocket of those who are selling and it may not result in the growth of the company. In offer for sale too, if company is doing well an investment can be made. Repayment of debt will reduce debt burden and may result in improved performance.
4. Price to Book Value: Price to Book Value should be lesser than or at par with the industry. In case of LG 48% premium listing, this factor has worked as they brought the shares at price where valuations were attractive.
5. Past performance of Index should not be given much weightage in deciding on an IPO investment. In Reliance Power case, past performance of Index lured the investors to subscribe at a high price.
6. Go through the Risk factors given in the offer and make an informed decision.
7. Do not get overwhelmed by the size of IPO as many times smaller size IPOs give better returns than a big size IPO.
8. Preferably invest in the last day after understanding the market and demand of the IPO.

There are many IPOs lined up and coming shortly. Invest wisely and enjoy the profits.