2025 has been a year of abundance for India on two fronts. In the skies, the monsoon season brought more rain than usual, about 108% of the average. Second, the stock market saw a record number of IPOs, with 94 mainboards launching their shares by the end of December. In December alone about Rs 30,000 crore worth IPO is set to debut with big names like Meesho, ICICI Prudentials, Clean Max Enviro Energy, wakefit,etc.
But just because there are many IPOs, it doesn’t mean all of them are good investments for you. Before buying an IPO, you should analyse the company and the industry, look at financial situation and financial personality, how much risk you can take, and what your long-term goals are.
In this article, we will talk in detail about risks and rewards that investing in IPOs bring and things you should consider before investing.
IPOs in December 2025
Even though the stock market has been slow, FIIs, Mutual funds, insurance companies, and HNIs are joining IPOs in big numbers. Companies want to raise money before the 2026 Budget and policy changes. And hence you see the rush to launch IPOs quickly.
December is shaping up to be one of the most significant months for India's primary market. The pipeline includes companies spanning technology, renewable energy, aerospace, financial services, consumer goods, and healthcare. Here are some mainboard names.
| Company | IPO size (in cr) | Industry | Date |
| Meesho IPO | 5,421 | Social commerce | Dec 3- 5 |
| Aequs IPO | 922 | Aerospace precision manufacturing | Dec 3- 5 |
| Vidya Wires IPO | 300 | Copper & aluminum wires | Dec 3- 5 |
| Wakefit Innovations IPO | 1,400 | Home and furnishings | Dec 8–10 |
| ICICI Prudential AMC IPO | 10,000 | Asset management | Dec 12–16 |
| Clean Max Enviro Energy IPO | 5,200 | Renewable energy | Third week Dec |
| Fractal Analytics IPO | 4,900 | AI and analytics | Mid-Dec (TBA) |
| Juniper Green Energy IPO | 3,000 | Renewable energy | Mid-Dec (TBA) |
| Corona Remedies IPO | 655.37 | Pharmaceuticals | Dec 8–10 |
| Nephrocare Health IPO | 871.05 | Healthcare | Dec 10–12 |
| Park Medi World IPO | 920 | Healthcare | Dec 10–12 |
Benefits of investing in an IPO
Early access
Buying an IPO means buying shares before the company starts trading on the stock exchange. You own a stake in the company from its public beginning. If the company performs well, early investors can benefit from quick listing gains and long-term growth, making it a valuable opportunity to capture potential upside from the ground level.
Listing gains
One of the biggest benefits of IPOs is the chance to make quick profits, called listing gains, on the first day of trading. Sometimes shares can jump significantly on listing day.
Take for example you bought LG electronics IPO, issued at ₹1140 per share. The IPO got listed at ₹1689.9, which means you made a profit of 48.24%.
It’s very important to know that there is no guarantee of listing gains. Moreover there are also high chances of IPO opening in loss.
Low cost entry
Companies may offer IPO shares at a lower price than their expected future value. This gives investors a chance to buy shares at a good price and benefit if the company grows over time.
Diversification
IPOs may provide access to many fast-growing sectors like fintech, renewable energy, healthcare, aerospace, AI, and consumer goods. This helps investors spread their money across different industries and reduce risk.
Investing in India’s consumption story
RBI says India’s economy is growing and so are companies especially in areas like consumer goods and services. You can take part in India’s growth story by investing in these companies at an early stage.
Risks of investing in IPO
Low returns in comparison to Nifty 50, Nifty 500
If you are a long-term investor looking for high returns from IPOs, you may be disappointed. According to research by 1 Finance Magazine, companies that listed delivered an annual return of only 5.9%, whereas simply investing in the Nifty 50 offers an annualised return of 12.8%, and the Nifty 500 offers 14.8%.
Falling listing gains
Well the most alarming sign if you are investing for listing gains is the collapse in average listing gains from 30% in 2023 (from mainboard IPOs) to just -15% in 30 November, 2025. That's devastating. Also only 35% of IPOs listed in 2025 (out of 326) delivered listing gain above 10% whereas 28% opened in loss.
Companies may be overvalued
Companies with not so strong business fundamentals are demanding valuations that exceed even well-established listed firms. Overpriced IPOs have become a systematic risk. Here’s why:
Higher IPO valuations mean more capital raised and an opportunity to exit for founders and promoters at peak valuations.
For merchant bankers higher valuations equal higher fees, a banker earning 1% commission makes ₹100 crore on a ₹10,000 crore IPO versus ₹50 crore on a ₹5,000 crore IPO
For existing investors (VCs, PE firms) an OFS component allows existing shareholders to exit at higher valuations
The Chief Economic Advisor V. Anantha Nageswaran has raised red flags about the changing nature of India's IPO market, warning that inflated valuations are increasingly common.
The OFS Problem
According to research by 1 Finance Magazine, between 2014 and 2024, companies raised ₹6,09,833 crore through IPOs. But 63.6% of this money went to existing shareholders through Offer for Sale (OFS), not to the company itself. This means most recent IPOs have been more about promoters and early investors selling their shares, rather than helping the company grow. When insiders sell a lot at high prices, it makes you wonder: if the company’s future is so good, why are they leaving now?
Grey Market Premium (GMP) is increasingly unreliable
Many a time people invest in an IPO based on increase in price of share in grey markets. But this increase in price, also called the Grey Market Premium (GMP) is not reliable as a signal for IPO success and recent events have proved it.
Many IPOs that had strong GMPs and high excitement in the grey market have actually listed at much lower prices. For example, NSDL, Orkla India, Tata Capital, Lenskart Solutions, and Studds Accessories all listed below what the grey market expected.
The grey market is unofficial and not regulated. High GMP does not always mean the IPO will do well on listing day. You should not depend on GMP and focus on the fundamentals of the company before investing in IPOs. Prices can change quickly and are based on trust rather than facts.
IPOs carry Sector-specific and business risks
Every IPO comes with its own set of risks that investors should carefully consider before investing. Some companies, like Meesho, may show strong growth in users or revenue, but still report losses or declining profits, which can signal challenges in turning growth into sustainable earnings. Others, such as Aequs, depend heavily on a single sector—like aerospace—which makes them vulnerable to downturns, order cancellations, or changes in demand. Capital-intensive businesses, such as Clean Max and Juniper Green, often face risks related to project execution, financing, and high debt levels. New-age tech and consumer-focused companies, like Nykaa, can sometimes be valued very highly at listing, but if the actual business performance doesn’t match those expectations, the stock price may fall sharply after the initial excitement fades. It’s important to understand these sector-specific and business risks, as they can significantly impact the long-term value of your investment.
Before investing in any IPO, check these points:
- Analyse business: Make sure you understand how the company makes money and if its business can grow over time. Avoid companies with unclear or risky models. Look at whether the company is making profits, growing its sales, managing debt, and generating cash. Don’t invest if profits are not stable or if the company is too dependent on debt.
- Fresh issue vs OFS: If most shares are being sold by existing owners (OFS), the company won’t get much money. Prefer IPOs where the company is raising fresh capital for growth.
- Risk Factors: Read the risk section in the IPO document. Watch out for risks like too much dependence on one customer, related-party deals, or regulatory issues.
- Ignore Market Hype: Don’t rely on rumors or grey market prices. They don’t always reflect the real value or guarantee gains.
- Where IPO money will be used: Find out how the company plans to use the IPO money. Good uses include reducing debt, expanding business, or research. Be careful if the purpose is too vague.
- Invest based on your asset allocation: Only allocate funds to IPOs as per your overall investment plan and risk profile.
- Don’t invest if the emergency fund is not completed: Ensure you have a sufficient emergency fund before investing in IPOs or other risky assets.
- Invest based on your financial personality: Consider your risk tolerance, investment goals, and time horizon before investing. IPOs may not suit conservative investors or those with short-term needs.
Talk to a Qualified Financial Advisor before making investment decisions
Before making any investment decision, it is extremely important to consult a Qualified Financial Advisor. Investing your hard-earned money involves risks, and the consequences of wrong choices can have a lasting impact on your financial well-being. A financial advisor brings expertise, experience, and an objective perspective to help you understand your risk profile, set realistic goals, and choose investments that align with your personal situation. They can guide you through complex products, explain hidden costs, and help you avoid common mistakes that beginners often make. Whether you are investing in stocks, mutual funds, real estate, or any other asset. Book a free call now!
