Is the IPO market the new gold? Fresh listings deliver 4X Nifty returns

Economic Times

4 days ago

Analysts say the strong IPO run is being driven by a mix of healthy retail participation, attractive pricing, and sectoral diversity.
Despite muted returns in broader markets, India's IPO space has outperformed in 2025, with 27 of 30 listings trading above issue price and delivering average gains of 25%. Strong retail demand, sectoral variety, and attractive valuations are driving momentum in the primary market.
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FPI Interest Remains in Primary Market
What's Driving the IPO Momentum?
In a year marked by cautious sentiment in secondary markets, India's IPO market has emerged as a surprising outperformer. While benchmark indices like the Nifty and Sensex have delivered modest returns of 6.2% and 5.3% respectively in 2025, fresh listings have raced ahead, offering investors a much-needed alternative.So far in 2025, 30 mainboard IPOs have listed, and 27 of them are trading above their issue price. The average return stands at 25%, nearly four times the Nifty's gain. While gold remains the top-performing asset class with a 31% year-to-date rise, IPOs have come a close second—outshining broader equity markets by a wide margin.Among the standout performers, Prostarm Info Systems has gained over 112%. Quality Power Electrical has more than doubled, delivering a 104.7% return since its February listing. Other notable gainers include Sambhv Steel Tubes (70.4%), Quadrant Future Tek (63.5%), Belrise Industries (45.2%), and Scoda Tubes (43.8%).At the same time, companies like Ellenbarrie Industrial Gases, Crizac, Anthem Biosciences, and Stallion India Fluorochemicals have delivered gains between 30–40%, despite broader market consolidation.Meanwhile, only three stocks, Indo Farm Equipment (-2.2%), Capital Infra Trust (-17.7%), and Arisinfra Solutions (-34.3%), have slipped below their issue prices.While foreign portfolio investors (FPIs) have been net sellers in the secondary market this year, their activity in the primary market paints a different picture.According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services , FPIs tend to exit the secondary market when valuations are high but continue to participate in IPOs and QIPs where valuations are perceived as more reasonable.'For 2025 up to July 19, total FPI sell figure stood at Rs 1.10 lakh crore, while buying through the primary market stood at Rs 27,239 crore,' Vijayakumar added.Analysts say the strong IPO run is being driven by a mix of healthy retail participation, attractive pricing, and sectoral diversity. This year's offerings span a range of sectors—from EVs and clean tech to pharma and industrials—broadening investor appeal.Another factor is valuation. With stretched prices in the secondary market, investors are looking to IPOs for better entry points. Many recent IPOs saw overwhelming demand, with overall subscriptions often crossing 50x, and in some cases, going beyond 100x.While not every IPO has delivered blockbuster gains, the trend signals a meaningful shift in investor appetite. As long as secondary valuations remain elevated and new companies continue to price their offerings well, the momentum in the primary market is unlikely to fade.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)