The muted returns from the stocks of companies that have issued initial public offers and been listed on the exchanges so far this year have raised apprehensions of delays in the launch of several large and high-profile IPOs that are in the offing. According to market experts and analysts, bearish sentiments and volatile markets due to global geopolitical disturbances have cast a pall of gloom on public issuances.

To make matters worse, retail investors have become cautious about new offers as listing day gains have almost disappeared.

Eight of the 17 IPOs launched on the mainboard this year are trading below their issue prices, raising serious concerns about their valuations. Similarly, of the 86 SME IPOs launched this year, more than half, or 45 companies, are trading below the issue price, with negative returns ranging between 1 per cent and 68 per cent, according to data sourced from Chittorgarh, an online IPO tracking platform.

The shares of Indo Farm Equipment, which raised ₹260 crore on the mainboard platform, were down 17 per cent at ₹175 a piece on Wednesday from their issue price of ₹215 a piece.

Similarly, the ₹3,500 crore IPO of Schloss Bangalore (Leela Hotels) shares plunged 9 per cent to ₹397 from the issue price of ₹435.

Other shares trading below their issue price include Laxmi Dental, Stallion India Fluorochemicals, Ajax Engineering, Denta Water and Infra Solutions, and Dr Agarwal’s Health Care.

Among the companies holding the fort are Hexaware Technologies and Quadrant Future Tek, which are trading at premiums of 19 per cent and 63 per cent to their issue price, while Quality Power Electrical Equipments was up 27 per cent.

Palka Arora Chopra, Director, Master Capital Services, said the lacklustre performance of recent IPOs will send alarm bells ringing about the forthcoming issues. Most companies took advantage of the premium valuations in the broader market and launched IPOs at higher valuations, thus limiting upsides for new investors, she said.

While sustained uncertain market conditions may delay some potential launches, the Indian market has gained positive momentum compared to other global markets, she said.

Trivesh D, COO, Tradejini, said at least 85 companies filed DRHPs with SEBI in the last five months, but only 10 managed to launch their IPOs in the same period. This reflects the cautious market sentiment around new issues.

In this year, only six companies have delivered over 70 per cent returns, and they were typically companies with strong fundamentals or operating in high-demand sectors, he said.

The primary market will bounce back once the macroeconomic uncertainty eases resulting in couple of successful listings, he added.

Dharan Shah, Founder of Tradonomy.AI, a research-driven AI-powered investment platform, said over 50 per cent of the IPOs this year were through offers for sale by existing promoters and not for business growth. Besides, the average PE (price to earnings ratio) of over 30 times for an OFS is not lucrative for serious investors.

This apart, signalling weak investor demand, the grey market premiums, which are a reliable predictor of listing gains, were also low, he said.

Published on June 18, 2025