52% of new-age IPOs outperform at lock-in expiry; is short-term exit the smarter bet?

India’s much-hyped new-age initial public offering (IPO) boom may have delivered blockbuster listings, but the real winners were investors who exited during the six-month lock-in period, reveals a latest report by Client Associates. The study revealed a stark dichotomy between market hype and fundamental performance.

The analysis of 25 new-age IPOs showed that 11 out of 21 companies (52%) generated positive alpha at the end of their six-month lock-in, compared to just 38-43% for investors who continued to hold beyond that period. The data suggested that pre-IPO investors achieved optimal risk-adjusted returns by exiting during the lock-in expiry window rather than maintaining long-term positions.

“Investors who exited at the six-month lock-in period seemed to have benefited from the listing gains that came about on account of high investor enthusiasm for the new-age IPOs,” the report noted.

The study is based on the performance of 25 new-age, venture capital and private equity-backed companies that went public between May 2020 and June 2025. These companies were from diverse sectors, including fintech, e-commerce, logistics, travel technology, and quick commerce.

As per the report, companies with a strong consumer connect stood out as the biggest wealth creators at the six-month lock-in expiry. Nykaa, backed by its dominant presence in beauty and lifestyle retail, delivered a staggering 320% return, generating an impressive alpha of 299.7% over the BSE 500. Similarly, Zomato , one of the most high-profile new-age IPOs, rewarded investors with over 156% returns, translating into an alpha of 129.5%, as retail enthusiasm and network effects lifted its stock. Other success stories included Awfis Space Solutions, Ixigo, and Zaggle, all of which managed to combine growth potential with credible monetisation paths.

On the flip side, some of the most talked-about IPOs turned out to be major wealth destroyers. Paytm, once India’s most valuable fintech, slumped 67.1% at lock-in expiry with a massive -87.1% alpha, while CarTrade shed over 60%. Even Ola Electric, despite its hype in the EV space, delivered negative 28.6% returns and an alpha of -50.2%.

The report observed that while “brand-driven businesses with clear monetisation models thrived in the short run, those without a viable path to profitability faced immediate market pushback.”

The report noted that companies experienced listing gains driven by high oversubscription multiples, but sustained long-term value creation remained elusive for most. While 68% of IPOs delivered listing gains, only 36% of IPO investors and 32% of post-IPO investors managed to beat the benchmark in the long term. Sustained outperformance proved elusive, as the initial hype quickly gave way to concerns over cash burn, competition, and unit economics.

“The proportion of companies generating positive alpha over the benchmark stands at 43% (9 out of 21) for Pre-IPO investors, 36% (9 out of 25) for IPO investors, and 32% (8 out of 25) for Post-IPO investors as of 16th June 2025,” it highlighted.

Shifting focus from growth to profitability

The study highlights a structural shift in investor behaviour. “Companies with clear paths to sustainable profitability significantly outperformed growth-focused peers, suggesting a fundamental shift from the pre-COVID era of high liquidity and rewarding aggressive growth to a market that now prioritises profitability and capital efficiency.”

The new-age IPO market has shifted from being driven purely by growth momentum in 2020-2021 to a far more profitability-focused lens in 2024-2025. This evolution signals a maturing capital market, where investors are prioritising companies that can demonstrate sustainable unit economics with clear pathways to profitability, dominant market positions with defensible competitive advantages, capital-efficient growth models that generate strong cash flows, and professional management teams with proven execution capabilities.

For retail investors, the optimal approach lies in adopting a balanced perspective that acknowledges both the opportunities and the limitations of exposure to new-age companies, the report concluded.

In the first half of 2025, as many as 12 new-age companies, including unicorns such as Meesho, Groww, boAt, and Physicswallah, filed their IPOs with the Securities and Exchange Board of India (Sebi).