By ipomarket.in Editorial Team · Last reviewed: 2026-09-15
Disclaimer: This article is for informational purposes only and does not constitute investment advice. IPO investments are subject to market risks. Please read the offer document carefully and consult a SEBI-registered investment advisor before investing.
"Are IPOs overvalued?" is one of the most common questions retail investors ask before applying. It is also one of the hardest to answer with a single yes or no. Record fundraising and heavy oversubscription can sit right next to weak listings and stocks slipping below their issue price. That is roughly the picture in India through 2025 and into 2026.
This article walks through what the verified data shows, where the evidence points to overvaluation, and where it does not.
The headline numbers first
By most measures, the primary market has been busy. According to KPMG's FY 2025-26 report, 108 companies raised around ₹1.76 trillion through IPOs in the financial year (April 2025 to March 2026). On a calendar-year basis, 2025 was reported as India's best-ever primary market year, with 100-plus mainboard IPOs raising a record $18.5 billion.
So money is flowing in. But the more revealing figure sits below the fundraising totals: what happened to those stocks after they listed.
The gap between hype and post-listing reality
Two data points do most of the work here.
First, average listing-day gains fell sharply. KPMG's FY26 report puts the average listing-day gain at around 8%, down from 28% in the previous financial year. That is a large drop, and it tells you the easy "listing pop" that many retail applicants chase has thinned considerably.
Second, and more telling, is what happens after the first day. Reporting cited from International Banker and other market analysis indicates that more than one-third of 2025 IPOs were trading below their issue prices in the secondary market. In plain terms, an investor who bought at issue and held would be sitting on a loss in over a third of cases.
That combination, healthy demand at bidding but weak performance afterwards, is the core of the overvaluation debate. If you want to understand why the grey market number that circulates before listing often overpromises, our explainer on what IPO GMP is and how it works is a useful primer.
Is the whole market overvalued? Not quite
Here is where nuance matters. The data does not support a blanket claim that Indian IPOs are systemically overvalued. It supports something narrower and, arguably, healthier: selective overvaluation being punished by the market.
A few points push against the "everything is expensive" narrative:
- Around two-thirds of 2025 IPOs were still trading above their issue price. The underperformance is real but not universal.
- KPMG's commentary points to investor sentiment leaning towards quality-driven issuances, with pricing discipline playing a central role. In other words, the primary market itself is being priced more carefully than in the frothier years.
- Subscription remained selective rather than indiscriminate. FY25 saw QIB and retail oversubscription averages of roughly 102x and 35x respectively, but that demand increasingly clustered around issues investors judged to be reasonably priced.
Analysts describe this as rational repricing rather than a broad bubble. Overvalued, hype-led listings underperformed; issues backed by fundamentals held up better. That is the market doing its job.
Why post-listing weakness happens
Several structural forces sit behind the pattern.
Accelerated promoter and PE exits. KPMG data shows private-equity-backed listings rose to about 35% of total issuances in FY26, up from 28% the year before. When early investors use an IPO primarily as an exit route, pricing tends to be pushed towards the top of what the market will bear, leaving less on the table for new shareholders. Understanding IPO lock-in periods for promoters and anchor investors helps you see when further selling pressure can arrive.
A shift towards SME issues. By 2025, SMEs reportedly accounted for over 70% of total IPOs by count. SME listings can be more volatile and thinly traded, which widens the range of post-listing outcomes.
Larger average deal size. Average IPO size reportedly more than doubled, from around ₹692 crore in an earlier period to about ₹1,605 crore recently. Bigger issues absorb more capital and often leave less room for outsized listing gains.
The NSE IPO as a live test case
The upcoming National Stock Exchange IPO is a useful lens on how discipline and scale interact. NSE filed its DRHP with SEBI on 17 June 2026 after years of delays and litigation.
Reported details include an estimated issue size of around ₹30,000 crore, which would make it the largest IPO in Indian history, ahead of Hyundai Motor India's ₹27,858.80 crore record from 2024. A price band of ₹1,700 to ₹1,785 per share has been reported, with the issue said to open on 17 September 2026 and close on 21 September 2026. Treat these figures as reported and subject to confirmation against the final offer document.
On financials, NSE reported Q1 FY27 revenue from operations of ₹4,560 crore, up from ₹4,032 crore a year earlier, and net profit of ₹3,121 crore versus ₹2,811 crore. A key risk flagged in reporting is concentration: options business reportedly contributed 60.22% of FY26 revenue, tying a large share of earnings to one product line that is exposed to regulatory change. That concentration risk is exactly the sort of thing valuation-focused investors are now scrutinising. Our NSE IPO page tracks the specifics as they are confirmed.
What this means for how you assess an IPO
The practical takeaway is not that IPOs are good or bad as a category. It is that the average outcome has narrowed, so screening matters more than it did in 2021 or 2024.
A few habits the data supports:
- Do not treat oversubscription as a valuation signal. Heavy demand at bidding did not prevent a third of 2025 issues from falling below issue price.
- Read the pricing against earnings, cash flow, and comparable listed peers rather than against grey-market chatter.
- Watch who is selling. A high offer-for-sale component from PE or promoter shareholders changes the risk profile.
If you want a structured way to do this, our 10-step framework for analysing an upcoming IPO covers financials, valuation, and red flags.
FAQ
Are Indian IPOs overvalued in 2025-26?
The evidence points to selective overvaluation rather than a broad bubble. Average listing-day gains fell from around 28% to 8%, and more than a third of 2025 IPOs traded below their issue price, according to KPMG and market reporting. But roughly two-thirds still traded above issue, and the primary market is reportedly pricing more carefully. So the answer is: some issues, yes; the whole market, not clearly.
Why did average listing gains fall so sharply?
Several factors line up: larger average deal sizes, a bigger share of PE-backed exits pushing pricing towards the top of the band, and investors screening more for fundamentals. Together these compressed the easy listing-pop that was common in earlier years.
Does high subscription mean an IPO is fairly priced?
No. Subscription measures demand at the bidding stage, not value. FY25 saw very high oversubscription averages, yet many of those same issues later underperformed. Treat subscription and grey-market premium as sentiment indicators, not valuation.
Is the NSE IPO overvalued?
That cannot be judged until the final valuation and offer document are confirmed. Reported figures suggest a very large issue with strong profitability but heavy revenue concentration in options, which is a regulatory-sensitive risk. The reported price band and dates should be verified against the RHP before drawing conclusions.
How can retail investors avoid overvalued IPOs?
Compare the asking valuation against earnings and listed peers, check how much of the issue is a fresh raise versus an offer for sale, and read the risk factors in the offer document. A checklist-based approach is more reliable than following listing-gain expectations.
Last reviewed: 2026-09-15. Figures are sourced from KPMG, Redseer and market reporting and should be verified against primary documents before any decision.