Atul Shinghal, Founder and CEO of Scripbox, notes that stable government and optimism about the economy have contributed to strengthening investors’ confidence in IPOs. He emphasised that investing solely for listing gains can be detrimental, as it carries significant risks. In an interview with Mint, Shinghal shared his views on IPO market trends and investment strategy for SME IPOs. Here are edited excerpts of the interview:
What is driving retail investors to IPOs?
Retail investors in India have been driven by a potent combination of abundant domestic liquidity, easy access via emerging digital investment platforms, and the allure of quick listing gains.
The sustained government stability and broad economic optimism have also played vital roles in strengthening investor confidence in new issues.
For instance, recent mainboard IPOs such as Sudeep Pharma Ltd., Excelsoft Technologies Ltd., and Capillary Technologies India Ltd. have attracted meaningful retail participation, as evidenced by retail subscription multiples of 15.65 times, 16.44 times, and 15.85 times, respectively.
However, institutional investors and HNI investors generally outpaced retail in subscription levels, with Sudeep Pharma showing a QIB subscription of over 213 times, indicating the continued dominance of institutional preference.
Big institutional participation signals trust in the issue’s fundamentals, but retail investors remain drawn to IPOs, hoping for listing-day gains and the opportunity to participate early in fast-growing companies.
The commuter mix of sectors—ranging from tech, healthcare, manufacturing, to consumer services—has broadened the IPO pipeline, increasingly appealing to diverse investor segments.
For example, companies in greener industries and technology have shown both strong investor interest and robust listing gains, aligning with evolving market themes over 2025.
Do you see any “irrational enthusiasm” among retail investors?
While retail interest is robust, there is evidence of selective or cautious enthusiasm rather than unchecked irrational exuberance.
IPOs such as Fujiyama Power Systems Ltd. saw much lower retail oversubscription (1.05 times) compared to institutional subscriptions (over 5 times), suggesting that retail investors were more hesitant.
This is consistent with initial listing price declines seen in some IPOs—Fujiyama Power Systems declined approximately 9% from the listing price by market close.
Such trends reflect a nuanced market where retail investors are increasingly discerning, avoiding certain hype-heavy or uncertain IPOs.
However, in SME IPO segments and niche categories, some irrational enthusiasm still exists where oversubscription can skyrocket due to limited availability and perceived “lottery” gains.
These speculative behaviours often lead to significant post-listing volatility, price corrections, and losses for late retail investors.
Thus, while overall retail enthusiasm remains robust, it is tempered by growing awareness of risks and selective investment.
Is it right to invest in IPOs solely for listing gains? What are the risks?
Investing solely for listing gains is a precarious strategy with significant risks and many disappointing outcomes.
Data from the last three months’ IPOs show mixed listing day and post-listing performances, illustrating this risk.
Our analysis of the last 24 IPOS suggests that the listing gains are 2% for the median. Hence, applying for random IPOs or all IPOs would have led to gains which are not high.
The Investors are considering selective examples of LG Electronics or PhysicsWalla and concluding that all IPOs lead to strong listing gains.
There are, and there will be, a few IPOs which have and will register losses on listing.
Relying on such listing pops assumes favourable market sentiment and optimum pricing, which are difficult to reliably predict.
● Overpaying during the IPO due to hype, leading to losses post-listing.
● Promoter exits disguised as IPOs (high secondary share sales), which do not inject fresh capital into business growth.
● Market volatility where shifts in sentiment can result in sharp price corrections.
● Reduced liquidity or lack of institutional follow-up buying, affecting aftermarket price stability.
Therefore, chasing listing gains on speculative grounds, particularly without thorough business due diligence, can significantly jeopardise investor capital.
What should investors consider before betting on an IPO?
Before buying into any IPO, investors should undertake a comprehensive evaluation, including:
● Business fundamentals: Assess profitability, growth prospects, competitive positioning, sector dynamics, and financial health.
● Promoter credibility: Stability and intentions of promoters, especially check the fresh issue versus secondary sales proportion in the IPO structure.
● Pricing: Relative valuations vis-à-vis peers and historical IPO pricing trends, avoiding overpriced issues.
● Subscription data: Analyse demand trends across institutional (QIB), HNI/NII, and retail segments. For instance, disproportionate institutional oversubscription and weak retail response may indicate pricing concerns or limited retail appeal.
● Broader market conditions: IPO performance is also sensitive to macroeconomic and market volatility, affecting investor sentiment.
For example, recently Tenneco Clean Air India Ltd. had a strong subscription across all categories (QIB: 174.78 times; HNI: 42.79 times; Retail: 5.37 times) and posted a strong positive listing return (+27.2%), demonstrating an IPO with balanced demand and potential.
How can IPOs fit into a long-term wealth plan?
IPOs should be integrated as a small, well-considered allocation within a diversified investment portfolio rather than the core holding. Long-term wealth building demands a focus on:
● Quality companies with demonstrated growth track records and robust fundamentals.
● Sustainability of business models aligned with emerging industries and secular growth trends.
● Reasonable valuations, avoiding the allure of purely speculative IPOs
● Understanding that IPOs can be volatile in the short term and require patience.
Selective IPO participation aligned to strategic goals can access unique growth opportunities unavailable in secondary markets.
For example, Groww, though a recent IPO, exemplifies a company operating in a fast-growing financial technology sector with a solid business outlook—balanced by adequate institutional and retail subscriptions.
Are IPOs changing domestic retail investor behaviour?
Yes, the IPO wave in 2025 demonstrates a shift among Indian retail investors towards more active participation in the capital market, spurred by digital access and increased investment awareness.
IPOs have encouraged some retail investors to seek event-driven profits through primary markets rather than the secondary market alone.
While speculative tendencies remain, there is also evidence of increasing sophistication with better selective investment based on business merits and subscription data trends.
This mixed behaviour is evolving; more retail investors now factor in broker analysis and subscription data, reducing irrational exuberance relative to previous booms.
However, the attraction of IPOs as investment vehicles has significantly deepened the retail investor base in India.
What should be the investment strategy for SME IPOs? How to spot potential multibaggers?
SME IPO investing is riskier due to the smaller size of companies, lower liquidity, and higher volatility.
Strategies for SME IPO evaluation include:
● Focusing on sound financial performance, transparent governance, and clear growth drivers.
● Avoiding issues driven predominantly by oversubscription hype or excessive promoter exits.
● Analysing competitive positioning in niche market segments with scalable business models.
● Reviewing past SME IPO performance trends and regulatory disclosures carefully.
Potential multibaggers in SME segments typically exhibit consistent profitability, minimal promoter dilution, and sector tailwinds supporting growth. Caution is warranted since many
SME IPOs have delivered highly volatile or negative returns post listing.
This data highlights the variance in demand across investor categories and the resultant listing outcomes.
It underscores the importance of investor demand analysis as a key element of IPO evaluation.
In conclusion, Indian IPO markets in 2025 represent a dynamic opportunity landscape with growing domestic retail participation and institutional dominance.
While enthusiasm remains, prudence through detailed business analysis, subscription scrutiny, and portfolio allocation discipline is paramount to harness IPOs effectively within long-term wealth creation frameworks.
This approach helps mitigate the risks of speculative excess and unlock sustainable investor value in India’s vibrant IPO ecosystem.
Read more stories by Nishant Kumar
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
