Only 1 in 3 new-age IPOs beat market: Study
BENGALURU: A five-year analysis of 25 venture capital and private equity-backed new-age companies that listed in India between May 2020 and June 2025 showed that sustained market outperformance has been rare.
A whitepaper by wealth management firm Client Associates found that only 36% of IPO investors, roughly one in three, generated positive alpha over the BSE 500. The success rate was 32% for post-IPO investors, while 43% of pre-IPO investors outperformed the benchmark.
While these companies often saw heavy oversubscription, with average subscription of 48.5 times, and 68% delivering first-day listing gains that averaged 24.1%, many failed to maintain those gains over time.
Companies such as Zomato, Nazara Technologies and Ixigo consistently outperformed, while others saw sharp declines in value post-listing.
IPO frenzy
Pre-IPO investors achieved the best risk-adjusted returns when exiting at the six-month lock-in expiry, with 52% of companies delivering positive alpha at that stage, compared to 38% for those who stayed invested longer. A group of 10 IPOs that had high retail demand in the unlisted market performed worse than the rest.
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For pre-IPO investors, average returns at the six-month lock-in expiry were -5%, compared with +45% for other listings.
IPO investors in this subset saw -6% alpha, while post-IPO investors faced -25% alpha.
The study found no consistent pattern between IPO performance and the proportion of shares sold via offer for sale (OFS) versus primary issuance. High-OFS listings such as Ixigo performed strongly, while some primary-heavy IPOs, including Ola Electric and Mobikwik, were among the weakest.
According to Client Associates, the exuberance of the 2020-2021 phase, marked by abundant liquidity and growth-focused narratives, has given way to a more disciplined market in 2024-2025, where profitability, cash flow generation and capital efficiency are key investor benchmarks. The report advised selective exposure to high-quality listed new-age companies, tactical IPO participation for listing gains, avoiding retail-driven unlisted market hype and using professional fund managers for private market allocations.
"India's startup IPO boom was driven more by narrative than numbers. Our analysis shows that while listing gains rewarded early risk-takers, sustained outperformance was reserved for companies built on solid fundamentals, not hype. Capital efficient growth, profitability, and business discipline are what drive long-term value," Nitin Aggarwal, director, Investment Research and Advisory, Client Associates, said.
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