After a blockbuster 2024 that saw record fundraising and strong debut-day pops, India’s initial public offering (IPO) market in 2025 appears to be losing some of its sparkle. Despite the continued strength in primary market activity, listing gains have shrunk sharply this year, signalling a clear shift in tone—from euphoric oversubscription to selective participation.

Average listing gains in the mainboard IPO segment have slipped to a single-digit 9.1% so far in 2025 (till October), according to data compiled by PRIME Database Group. This represents a sharp 70% decline from the 30.25% average gain recorded in 2024 and is also well below the 28.68% achieved in 2023. The performance was largely in line with 2022 figures, when 40 IPOs debuted, yielding modest average returns of 10.72%.

So far this year, 91 companies have listed on the bourses, compared with 90 listings in 2024. Of these, 47 issues delivered positive listing gains, while 36 opened in the red, exchange data shows.

Notably, the decline in listing gains comes despite robust fundraising activity. In the first nine months of 2025 alone, 81 IPOs have collectively raised ₹1.21 lakh crore — the second-highest annual mop-up in five years. Yet, the enthusiasm that once greeted new listings has clearly waned.

According to Pranav Haldea, Managing Director of PRIME Database Group, the slowdown in debut-day gains is closely tied to market volatility. The BSE Sensex has delivered just 6.5% year-to-date (YTD) returns, compared with over 8% in 2024.

“Listing gain is usually a function of how the broader secondary market is doing, with gains being higher in bullish markets. The volatility and choppiness seen in the last year has resulted in lower listing gains for 2025,” he explains.

Haldea adds that retail investors, who typically chase IPOs for short-term listing profits, have turned cautious.

“Retail investors primarily come in for listing gains. This does impact demand from them, which can already be seen in terms of a lesser number of retail applications and lower oversubscription levels compared to the previous year,” he notes.

While valuations continue to be debated, Haldea cautions against broad generalisations. “It is unfair to generalise. Every IPO needs to be looked at on its own merit with respect to valuations.”

Is aggressive pricing denting listing gains?

Market observers say the muted post-listing performance is more than just a cyclical phenomenon. According to Anil Sharma, co-founder of IPO Central, the subdued sentiment reflects “aggressive pricing” by issuers.

“The IPO market this year has been largely unexciting from the perspective of listing gains, which form the bedrock of retail and HNI involvement,” says Sharma. “It has largely been driven by aggressive IPO pricing, leaving little on the table for investors.”

Despite the tepid listing-day gains, investor participation has stayed robust. Sharma believes the correction is self-regulating. “The problem at hand is by and large self-correcting. All it takes is a couple of discounted listings and undersubscriptions for issuers to get back to sensible pricing.”

He warns that retail participation may continue to shrink, especially as institutional flows dominate high-value offers.

“Retail apathy, if any, is unlikely to derail IPO demand because mutual funds are rushing to expensive IPOs using retail investors’ money. Many of the new-age startup IPOs have just 10% allocation to retail investors, which tilts the equation in favour of issuers,” he adds, quipping that “2025 earnings at 2030 prices” best describes some of the recent IPO valuations.

Valuations stretch, enthusiasm cools

Analysts agree that the underlying issue lies in the widening gap between valuations and fundamentals. Khushi Mistry, Research Analyst at Bonanza Portfolio, points out that investor fatigue has set in after several years of high activity and rich pricing.

“Recent data indicates that average listing gains have fallen significantly to around 8.4% from much higher levels of over 27% in previous years,” she says. “This decline is partly due to investor fatigue, as the market shows signs of cautiousness and selectivity after a prolonged boom.”

Mistry adds that the surge in IPOs trading below their issue prices signals waning enthusiasm and skepticism about valuations.

“Companies may be adopting more aggressive pricing strategies to raise funds amidst high IPO activity. Reports highlight that IPOs are being valued ‘too high’, leaving little room for listing gains,” she notes.

According to her, the trend points to a misalignment between IPO valuations and underlying fundamentals.

“Many IPOs in 2025 are being priced at levels not justified by traditional valuation metrics. The tendency to overprice reflects a push to maximise fundraising rather than reflect intrinsic value,” she says.

Strong pipeline ahead

Despite the slowdown in debut-day excitement, India’s IPO market remains vibrant in terms of deal flow and fundraising momentum. The total amount raised through mainboard IPOs is set to cross the ₹2 lakh crore mark in 2025, with offerings worth around ₹50,000 crore expected to hit Dalal Street this month. So far, 81 mainboard companies have already mobilised over ₹1.2 lakh crore, underscoring the strong appetite for equity capital despite muted listing gains.

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