According to a recent Capitalmind Financial Services analysis, 18 of the top 30 IPOs have underperformed the Nifty 500 since they were listed.
The finance advice business analyzed the top 30 IPOs by offer size to compare the results for investors who purchased at the IPO price and held the equities to the Nifty 500 index. This includes the impact of dividends, providing they are reinvested in the stock.
Of the 30 reviewed, eight IPOs produced negative returns, wiping out investors' capital. Out of the top ten IPOs, only two have outperformed the Nifty 500.
The first, Coal India, has just quadrupled its price over 14 years, despite experiencing periods of extreme volatility. When dividends are taken into account, Coal India barely manages to outperform the index's performance.
In comparison, Zomato has returned significantly more than the Nifty 500. Since its listing, the meal delivery aggregator has returned 265%. During the same period, the Nifty 500 index has increased by around 76 percent.
Five of the top ten IPOs are from the last two years. Several companies, notably Bajaj Housing Finance, Bharti Hexacom, and Brainbees (First Cry), have benefited from the strong market attitude.
Among the top 30, other major winners are Hindustan Aeronautics, Indian Railway Finane Corp, Sona BLW Precision Forgings, and ICICI Lombard.
Anoop Vijaykumar, Investments & Head of Research at Capitalmind Financial Services, stated, "Overall, large IPOs have struggled to provide excess returns for investors. IPOs abound in bull markets because they receive optimistic values, and most late-stage bull markets are defined by a few significant IPOs that are optimistically priced."
He went on to say that when the profits growth required to justify those values does not materialize, paired with a mean-reversion in broader markets, high-profile IPOs wind up providing lower-than-expected results.
The financial industry has generally led public market fund-raising, accounting for 27% of total funds raised in 2024. However, consumer companies have grabbed the lead in 2024, accounting for 34% of all money raised. Industrials followed with 14%.
