By ipomarket.in Editorial Team · Last reviewed: 2026-10-26
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.
Many retail investors treat IPOs as the exciting edge of their portfolio, and a few go further: they try to build a long-term holding entirely from new listings. The logic sounds reasonable. You get in early, you ride the growth story, and you avoid "expensive" mature stocks. But the data from the past two years tells a more sobering story. Listing-day pops and long-term wealth creation are not the same thing, and conflating the two is where a lot of IPO-only portfolios come undone.
This article walks through what the 2025 and early-2026 numbers show, what longer academic studies have found about IPO performance over three years and more, and why an IPO-only approach carries risks that are easy to underestimate.
The 2025 IPO year: big volume, thin returns
On the surface, 2025 looked like a blockbuster. India saw 108 mainboard IPOs raise ₹1,83,432 crore in total. That is a lot of capital and a lot of choice for investors building a watchlist.
The returns, though, did not keep pace with the activity. The median listing gain collapsed to 3.8% in 2025, down from 15.2% in 2024. In other words, the typical IPO barely moved on debut. For context, PRIME Database Group figures show average listing gains for January to October 2025 fell to 9.1%, down roughly 70% from the 30.25% average recorded in 2024.
The contrast with the financial-year picture is striking. KPMG analysis found that in FY25 (April 2024 to March 2025), 80 mainboard IPOs raised ₹1.63 lakh crore with an average listing gain of 70%. That number reflected the froth of late 2024, and it faded fast as the calendar turned.
Listing-day success doesn't last
Here is the statistic that should matter most to anyone thinking long term. Of the 108 mainboard IPOs listed in 2025, 65% opened at a profit on their debut day, yet only 41% were still trading above their listing price by 31 December 2025. Put differently, 59% of 2025 IPOs were underwater by year-end.
A separate reading of the data confirms the same direction of travel: as of 24 December 2025, only 54 of the year's 102 IPO issues traded above their offer price. So even measured against the price you actually paid in the IPO, fewer than half were in the green.
The takeaway is uncomfortable for the IPO-only investor. A strong listing day is not evidence of a durable business. It often just reflects demand-supply dynamics on day one, which can reverse within weeks. If you are holding for years, the listing pop is noise.
What longer studies show
Stretch the window further and the picture does not improve on its own.
A 13-year analytical study covering 2012 to 2025 reportedly found that average IPO returns were 12.33% at six months, 20.29% at one year, 10.03% at two years, and 8.72% at three years. On that reading, returns peaked around the one-year mark and then faded, which is why the authors described one year as the "sweet spot" for holding IPO stocks rather than holding indefinitely. Treat these as reported averages, not a promise of future results.
An older cohort study paints a harsher long-run picture. Research on 377 Indian IPOs issued between 2005 and 2015 found 36-month post-listing buy-and-hold abnormal returns of -57.33%, with only about 10% of companies (38 of 377) beating the benchmark index over the three-year term. Abnormal return here means performance relative to the broader market, so a deeply negative figure indicates most IPOs lagged a simple index over three years.
To be fair to the data, the long-run underperformance is not a universal law. A 2023 academic study using the Fama-French five-factor model concluded that long-run underperformance by IPO firms is specific to the sample and methodology used, and is most prevalent in years of high IPO volume. The honest reading: outcomes vary by cohort and by how you measure them, but the odds of a randomly chosen IPO beating the index over three years have historically been poor.
Early 2026: demand and gains are cooling
The trend into 2026 reinforces the caution. Average listing gains reportedly declined further to around 8% in early 2026, described as the lowest since 2019, with only 8 of 32 mainboard IPOs delivering double-digit gains in early 2026 versus 18 in early 2025. These are reported figures, so treat them as directional rather than final.
Demand has softened too. Median IPO subscription fell to 9.33× in October 2026, down from 71.26× in August 2026. Retail subscription moderated across 2025 as well, from 33.71× in 2024 to 26.99× in 2025. And on the leveraged end, SEBI data showed non-institutional investor (NII) oversubscription roughly halved from 38 times to 17 times year-over-year. When the leveraged money steps back, listing-day pops tend to shrink. You can track live demand on our IPO subscription status explainer.
Not every IPO is equal
The averages hide a wide spread, which is the real argument against an indiscriminate IPO-only strategy. In 2025, the best performers were genuinely strong: Highway Infrastructure listed at ₹115 against an IPO price of ₹70, a 64% gain, and Urban Company listed at ₹162 against ₹103, a 58% gain. Even so, both reportedly showed post-listing volatility, which again separates the debut from the durable outcome.
At the other end, Glottis listed at ₹84 against ₹129, a 35% loss, and Om Freight Forwarders listed at ₹90 against ₹135, a 33% loss. An investor who mechanically applied to everything would have owned these too.
There is a pattern worth noting. According to one 2025 market review, quality IPOs with clear revenue visibility, manageable debt and scalable business models in manufacturing, capital goods and niche technology saw listing gains between 40% and 70%, while consumer-tech and leveraged companies delivered flat to negative gains. That is reported commentary rather than hard data, but it aligns with the broader message: business quality, not the IPO label, drives the long-run result.
So, can you build a long-term portfolio from IPOs alone?
The data does not support it as a strategy on its own. Three problems stand out.
First, survivorship. With 59% of 2025 listings below their listing price by year-end, a basket bought across the full IPO calendar would have been dominated by laggards. Picking winners in advance is exactly the skill that most studies suggest investors lack.
Second, concentration and timing risk. IPOs cluster in hot markets, and high-volume years are precisely when long-run underperformance has historically been most prevalent. An IPO-only portfolio is structurally overweight on whatever sector happens to be in fashion at issue time.
Third, no track record. A newly listed company has limited public history to analyse. For a long-term holding, that is a disadvantage compared with established businesses that have reported through multiple cycles. If you do analyse IPOs for the long term, our long-term holding framework walks through what to look for in the offer document.
None of this means IPOs have no place in a portfolio. It means they work better as selective additions, chosen on fundamentals, than as the entire foundation. The grey-market buzz around a listing tells you almost nothing about three-year performance, as our guide on GMP versus business quality explains.
FAQ
Did most 2025 IPOs make money for long-term holders?
No. While 65% of the 108 mainboard IPOs in 2025 opened at a profit, only 41% were still above their listing price by 31 December 2025. That means 59% were trading below their listing price by year-end, so most listing-day "winners" did not hold their gains.
What does three-year IPO data show?
One reported 13-year study found average IPO returns of 8.72% at three years, lower than the 20.29% average at one year. A separate study of 377 IPOs from 2005 to 2015 found 36-month buy-and-hold abnormal returns of -57.33%, with only about 10% beating the benchmark over three years. Outcomes vary by cohort and method.
Are IPO returns getting worse?
The median listing gain fell from 15.2% in 2024 to 3.8% in 2025. Average gains reportedly declined further to around 8% in early 2026. Demand has also cooled, with median subscription at 9.33× in October 2026 versus 71.26× in August 2026.
Were there any strong IPOs in 2025?
Yes. Highway Infrastructure gained 64% on listing (₹70 to ₹115) and Urban Company gained 58% (₹103 to ₹162), though both reportedly saw post-listing volatility. At the other end, Glottis fell 35% and Om Freight Forwarders fell 33% on debut, showing the wide spread of outcomes.
Is an IPO-only portfolio a good long-term strategy?
The historical data does not support it as a standalone approach. High failure rates after listing, concentration in hot sectors, and limited track records make IPOs better suited as selective, fundamentals-driven additions rather than the core of a long-term portfolio.
Last reviewed: 2026-10-26 by the ipomarket.in Editorial Team.