The allure of investing in an Initial Public Offering (IPO) in India is hard to resist, especially for young investors who often see IPOs as a get-rich-quick scheme that will make them millionaires overnight. Constantly encouraged by flashy advertisements and finfluencers, the narrative is simple: get in early, ride the wave, and cash out big. However, the reality of IPO investing is often less glamorous than it seems. When it comes to long-term wealth creation, IPOs have a much worse track record compared to secondary market investments. While investing in
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Decoding IPO trends from 2014 to 2024
You don’t have to take our word for it. 1 Finance Magazine ran an analysis of IPOs from 2014 to 2024 to understand the overall trends in primary and secondary share sales, and how they have performed for investors. Before we delve into numbers, let’s understand how many companies have launched IPOs during that timeframe.
According to data from the Securities and Exchange Board of India (SEBI), 897 companies filed offer documents between January 1, 2014, and December 31, 2024. However, SEBI’s monthly bulletins indicate that 1,489 companies raised funds worth ₹6 lakh crore through IPOs during the same timeframe. Out of this, 1 Finance Magazine research compiled data on 1,380 companies, covering 97% of the total funds raised during this period.
IPO listing gains: Myth vs. Reality
“Share listing at an 80% premium on debut, investors cheer.” Every time a mega IPO launches, you hear such stories. Most people think that they will also make money on listing day and sell the stock. After all, if you are almost doubling your money on day one, why not? But how true is this for general IPO investors? In reality, such outcomes are quite rare.
According to research from 1 Finance Magazine, only 4.6% of companies—just 64 out of 1,380—generated more than 100% returns on their listing day between 2014 and 2024. Around 29.8% saw listing day gains between 0% and 10%. Meanwhile, 18.7% of IPOs yielded returns of 10% to 25%, and only about 12% achieved gains between 25% and 50%. A mere 11% of IPOs resulted in gains of 50% to 100% on their listing day. Further, 24% of companies gave a negative closing on the listing day.
Check the listing gains of IPOs launched between 2014 and 2024
| Gain/loss range (%) | Count | % of total IPOs |
| -50% to -100% | 5 | 0.40% |
| -25% to -50% | 9 | 0.70% |
| -10% to -25% | 75 | 5.40% |
| -10% to 0% | 242 | 17.50% |
| 0% to 10% | 411 | 29.80% |
| 10% to 25% | 258 | 18.70% |
| 25% to 50% | 165 | 12% |
| 50% to 100% | 151 | 11% |
| More than 100% | 64 | 4.60% |
Source: 1 Finance Magazine
As you can see, 47.3% of all companies launched between 2014 and 2024 generated returns of between -10% and 10% on their listing days.
While the prospect of significant gains on listing day is enticing, investors need to be careful and not get carried away by flashy stories about huge IPOs.
Long-term gains from IPO: Do IPOs really make investors rich?
Many people who don’t make listing gains in IPOs turn these stocks into long-term holdings, hoping to make money on them one day. Let’s check how these IPOs have performed for investors who bought at the offer price and held onto their shares. Research from 1 Finance Magazine shows that the median annual return of IPOs was 5.9% from 2014 to 2024, while the major market indices, Nifty 50 and Nifty 500, provided returns of 12.8% and 14.8%, respectively, during the same period.
If you think the low return is due to the listing of smaller companies in the SME segment, 1 Finance Magazine further breaks down the data by the issue size of companies. What emerges is even more troubling for investors. A total of 915 companies launched during this timeframe had an issue size between Rs 0 to Rs 50 crore, with a median annual return of just 4.8%. Only 138 companies with an issue size of Rs 1,000 crore or more had an annual median return of 10%. Additionally, 118 companies with issue sizes between Rs 500 to Rs 1,000 crore experienced a median return of 9.1%.
Average annual returns performance of companies that launch IPOs (2014-2024) by issue size
| TOTAL ISSUE SIZE (IN ₹ CR) | COUNT OF COMPANIES | MEDIAN ANNUALISED RETURNS |
| 0-50 | 915 | 4.8% |
| 50-100 | 88 | 5.3% |
| 100-250 | 45 | 6.2% |
| 250-500 | 76 | 3.6% |
| 500-1000 | 118 | 9.1% |
| 1000+ | 138 | 10.0% |
| Overall | 1,380 | 5.9% |
Source: 1 Finance Magazine
Therefore, the poor performance of IPOs is not limited to any specific category or issue size. Companies that list on exchanges tend to underperform compared to the broader indices, on a median basis, regardless of the funds raised. The few companies that raised ₹1,000 crore or more did perform better than others. So, the multi-bagger dream that you have from IPOs may be too good to be true.
Conclusion:
The promise of making money through IPOs is nothing but playing the lottery. As you can see, most IPOs fail to deliver substantial gains for you, with many underperforming market indices. Even IPOs with a decent ticket size may fail to give you returns on listing day or in the long-run. Larger IPOs, while slightly better, rarely lived up to the multi-bagger dreams peddled by hype. For sustainable long-term wealth creation, a disciplined approach favouring fundamentally strong companies in the secondary market proves far more reliable than the momentary thrill of IPO investing. Investors should remain cautious, as the potential for quick gains is often overstated, and long-term returns from IPOs lag behind traditional market investments.
