Over the past few years, Initial Public Offerings (IPOs) have grabbed a lot of attention from investors in India. While some of these IPOs have given investors substantial profits, others have disappointed, causing significant losses. With Hyundai India’s IPO being talked about as potentially the biggest IPO in Indian history, it’s important to reflect on whether the sheer size of an IPO translates to profitability for investors.
Let’s take a look at some of India’s biggest IPOs and how they’ve performed since listing, revealing that bigger doesn’t always mean better in the world of stock market investing.
Size Doesn’t Always Equal Success
One of the most prominent examples of a massive IPO not living up to expectations is the Life Insurance Corporation (LIC) IPO in 2022. LIC raised a staggering ₹20,557 crore, but it quickly became clear that size alone doesn’t guarantee success. The shares of LIC fell 7.75% on its listing day and have continued to underperform, now sitting 39% below the issue price. This IPO, which was highly anticipated by investors, has left many disappointed.
A similar story unfolded with Paytm (One 97 Communications), which raised ₹18,300 crore. Despite the hype, the stock saw a massive 27.25% drop on the day of listing and has continued to lose value, now sitting 74% below the issue price. The lesson from these IPOs is that just because an IPO is large doesn’t mean it will bring instant returns.
Success Stories: Coal India and Zomato
Not all big IPOs have been a disappointment. Coal India, which raised ₹15,200 crore, saw a 40.6% rise on its listing day and remains slightly above its issue price today. Similarly, Zomato’s IPO, which raised ₹9,375 crore, surged 51.3% on listing and has since continued to grow, now sitting 54% above its issue price.
These examples highlight that while some IPOs fail, others have proven to be good investments for those who bought in early and held on through market fluctuations.
A Look at More Big IPOs and Their Results
- Reliance Power raised ₹11,700 crore but saw a 17.22% drop on its listing day. Today, its stock price is 94% below the issue price, making it one of the worst performers.
- SBI Cards and Payment Services raised ₹10,355 crore and, despite falling 9.2% on the listing day, it has since rebounded and is now trading 32% above its issue price.
- Vodafone Idea raised ₹11,700 crore but performed poorly, dropping 23.43% on listing and currently 85% below its issue price.
- IRFC (Indian Railway Finance Corporation) raised ₹4,633 crore and had a weak debut with a 4.3% drop. Today, it remains 5% below its issue price.
What Can We Learn?
The performance of these IPOs shows that investing in large IPOs is not a guaranteed way to earn profits. In fact, out of the 9 big IPOs mentioned, 6 resulted in losses for investors, while only 3 were profitable. Investors need to be cautious, doing their research on the company’s fundamentals, financials, and market position before investing in an IPO.
The Takeaway for Investors
While big IPOs like Hyundai India’s upcoming offer might seem tempting, it’s essential for investors to remember that the size of an IPO doesn’t determine success. The market’s conditions, the company’s growth potential, and long-term financial health should guide investment decisions. For those considering IPO investments, patience and a long-term strategy are key to navigating the risks and rewards of the stock market.
