Market volatility hits IPOs, 37 newly listed stocks now below issue prices. Is the IPO boom fizzling out?

Stock Market: The Indian IPO market, which outperformed the secondary market in recent years, has been struggling to maintain the same momentum this year as investor sentiment weakens toward risky assets amid mounting concerns that Donald Trump’s trade policies could drag down the global economy.

A majority of the companies that raised funds so far this year have seen lukewarm demand for their issues. Data shows that retail investors, whose portion usually sees strong demand for SME issues, received significantly lower subscriptions compared to previous months, reflecting cautious sentiment amid market volatility.

The prolonged sell-off in the domestic market is making investors jittery, as the correction is wiping out billions of their wealth, turning their portfolios deep red and prompting them to adopt a wait-and-watch approach before making fresh investments, resulting in less demand for new issues on Dalal Street.

Over 65% of 2025 listings trade below issue prices

According to Trendlyne data, 55 companies have successfully listed their shares on Indian exchanges so far in 2025 following the completion of fundraising. However, 37, or 67%, are now trading below their issue prices, reflecting weak investor sentiment. 

Looking at segment-wise performance, 6 out of 11 stocks from the main board segment and 31 out of 44 stocks from the SME segment are trading below their issue prices.

In terms of individual stocks, GB Logistics Commerce has emerged as the weakest performer, trading at a 61% discount to its IPO price.

It is followed by Davin Sons Retail and Citichem India, both of which are trading 50% below their issue price. Other stocks, such as Ken Enterprises, Delta Autocorp, Malpani Pipes and Fittings, and 13 others, are down between 20% and 54% from their IPO prices.

So far in March, five companies have been listed on exchanges, with three of them debuting below their issue prices amid weak investor demand, as these companies received subscription rates of just 1-5 times, with poor response from the retail segment.

This is a stark contrast to last year, when many SME issues saw their retail portion subscribed up to 500 times, with some cases reaching a staggering 2,000 times.

Post-2024 IPO frenzy, what’s in store for 2025?

Analysts at domestic brokerage firm Bajaj Broking said that the IPO market in 2025 has been relatively quiet compared to 2024 due to a combination of market volatility, liquidity concerns, and regulatory scrutiny. Uncertainty from global geopolitical tensions and fluctuating interest rates has made investors more cautious, while higher bond yields and a tighter monetary environment have reduced excess liquidity, impacting risk appetite.

Additionally, concerns over high valuations have led many companies to delay their listing plans, fearing a lack of investor enthusiasm. Stricter SEBI regulations on disclosures and pricing have also made companies reconsider their IPO timelines.

Furthermore,it said that heavy influx of IPOs in 2024 led to a saturation effect, making investors more selective this year. However, the brokerage believes that if market conditions stabilize and interest rates soften, IPO activity could pick up in the latter half of 2025.

The brokerage noted that despite receiving SEBI approvals, some companies have delayed or paused their IPO listings due to market volatility, weak investor sentiment, and unfavorable valuations. Factors such as global economic uncertainty, fluctuating interest rates, and sector-specific challenges have made firms cautious about their public debut. Many are waiting for improved market conditions to ensure better pricing and investor participation, it stated.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.