Whalesbook
Investor Preference Shifts
India's primary market is sending a clear signal in 2025: bigger issuances are yielding superior returns for investors. A deep dive into the 103 IPOs that have entered the market reveals a stark performance divergence between large-cap offerings and their smaller counterparts.
Companies that successfully raised ₹3,000 crore or more through IPOs saw average listing gains of 19%, with current price gains holding strong at 18%. In contrast, IPOs below this threshold delivered a more modest 9% return on both listing day and in subsequent trading.
Drivers of Scale Premium
Industry experts attribute this trend to the inherent characteristics of larger companies. "Large sized IPOs tend to come from companies with established business models, predictable cash flows and strong governance frameworks," stated the CEO of a domestic investment bank. These attributes are highly attractive to long-term institutional capital, which plays a crucial role in price discovery and sustaining post-listing performance.
V Jayasankar, MD at Kotak Investment Banking, echoed this sentiment, noting that mid-cap and large-cap IPOs with mature businesses "offer stability, scale and clarity of earnings." This predictability supports disciplined pricing and healthier long-term outcomes for investors, creating a wide performance gap that highlights the value of "quality issues."
Performance Divide
Scale not only brings credibility but also confidence. Of the 17 large IPOs launched, only three recorded negative returns on listing. This contrasts sharply with the 86 smaller IPOs, of which 21 have struggled to maintain their debut valuations. Mega-issues like LG Electronics (50% gain), Meesho (45%), and Physicswalla (31%) have delivered robust double-digit returns. Meanwhile, several smaller IPOs, including Glottis (down 53.3%) and Jaro (down 51%), have significantly eroded investor wealth.
While not all smaller IPOs have faltered, and exceptions like Urban Company (56% listing gain) exist, the overarching trend is clear. Investors, both retail and institutional, are increasingly prioritizing size, stability, and scale when allocating capital in India's deepening IPO pipeline.