IPO boom turns bust: 75% of FY26 listings below debut levels

When compared with issue prices, around 68 per cent of mainboard IPOs and nearly 70 per cent of SME listings are currently trading below their offer price

Devanshu Singla New Delhi

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IPOs in FY26: Nearly three-fourths of companies that went public in financial year 2025-26 (FY26) are trading below their listing price, reflecting a sharp reversal in investor sentiment despite a record IPO fund raise this financial year. Market analysts attribute the sharp underperformance to various factors, including excessive supply, elevated valuations, and a volatile secondary market.

Out of the 107 mainboard IPOs listed so far, only 26 are trading above their listing price, while 81, or about 75 per cent, have slipped below. The underperformance is similar in the SME segment, where nearly 74 per cent of stocks are below their debut price, according to data from Prime Database.

When compared with issue prices, around 68 per cent of mainboard IPOs and nearly 70 per cent of SME listings are currently trading below their offer price. Some of the major companies that debuted during the year include Tata Capital (₹15,112 crore), HDB Financial (₹12,500 crore), LG Electronics (₹11,605 crore), ₹ICICI Prudential AMC (10,602 crore), and Lenskart Solutions (₹7,278 crore).

The FY26 has seen 112 mainboard IPOs raising ₹1.79 trillion, the highest ever, while SME issuances surged to 254 issues, mobilising over ₹10,900 crore. This follows the strong momentum in FY25.

Uday Patil, executive director at PL Capital, said that subdued secondary market conditions, valuation overreach, and reduced exposure to Indian equities by foreign institutional investors (FIIs) have depressed sentiment. Additionally, corrections and volatility in benchmark indices have weakened investors' risk appetite, while geopolitical uncertainties have further dented confidence.

Patil added that the spillover of the FY25 IPO boom into FY26 resulted in "too many IPOs chasing limited capital", exacerbating the pressure on post-listing performance.

TOP 5 WEALTH CREATERS AND DESTROYERS COMPANY ISSUE AMOUNT (Rs.crore) LISTING DATE CHANGE LISTING PRICE VS MARKET PRICE ATHER ENERGY 2,980.76 06/May/2025 129.55 BELRISE INDUSTRIES 2,150.00 28/May/2025 86.14 JAIN RESOURCE RECYCLING 1,250.00 01/Oct/2025 65.91 ADITYA INFOTECH 1,300.00 05/Aug/2025 61.17 BILLIONBRAINS GARAGE VENTURES 6,632.30 12/Nov/2025 42.28 SOLARWORLD ENERGY SOLUTIONS 490 30/Sep/2025 -62.42 ELLENBARRIE INDUSTRIAL GASES 852.53 01/Jul/2025 -62.35 VMS TMT 148.5 24/Sep/2025 -62.12 MANGAL ELECTRICAL INDUSTRIES 400 28/Aug/2025 -60.82 HIGHWAY INFRASTRUCTURE 130 12/Aug/2025 -60.71 Source: Prime Database Data as of March 23, 2026

"The weak post-listing performance is largely due to aggressive valuations, especially in new-age companies, which were priced on future growth potential rather than current earnings visibility," said Ratiraj Tibrewal, chief executive officer at Choice Capital.

While institutional investors initially supported such businesses, volatile market conditions led to a shift in sentiment, making investors far more cautious on valuations, he added.

Kranthi Bathini, equity strategist at WealthMills Securities, said during a phase of strong liquidity and buoyant sentiment, promoters "naturally sought to sell at top-tier prices", and while the market initially absorbed the supply, the ongoing volatility has led to a sharp correction.

According to Patil, valuations were "overstretched in new-age tech companies, loss-making or low-margin companies, and PE/VC exit-driven IPOs".

Tibrewal also said that premium multiples based on scalability and market opportunity tend to correct sharply in volatile conditions.

The changing market dynamics are also reflected in investor behaviour. High subscription levels are no longer translating into listing gains, and investors are becoming more selective in allocating capital.

Bathini noted that the market is turning increasingly stock-specific, with investors focusing more on earnings visibility rather than momentum-driven bets.

IPO market outlook for FY27

Looking ahead, the primary market activity is expected to remain robust, but with a more measured approach.

“A strong pipeline for IPOs is waiting to hit the capital market. However, present conditions have made it time-sensitive,” Patil said. He added that while “smart money is waiting for good opportunities”, it would take stability in markets for momentum to return.

Tibrewal expects the companies to adapt by improving pricing strategies, reducing issue sizes, and timing offerings more carefully. Investor preference will shift towards companies with profitability, strong governance, and reasonable valuations rather than narrative-driven growth stories.

The recent correction is expected to offer selective opportunities for disciplined investors.

However, Tibrewal cautioned that not all corrected IPOs represent value. Investors should focus on long-term earnings potential and business quality rather than assuming that price declines automatically translate into attractive opportunities, he said.

Bathini noted that the recent correction has made valuations in some new-age companies more reasonable, offering opportunities for long-term investors.

Disclaimer: Views and outlook shared belong to the brokerage/analysts and are not endorsed by Business Standard. Readers' discretion is advised.

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First Published: Mar 27 2026 | 7:38 AM IST