Do IPOs help create wealth generation?

In the last five years, India’s IPO market has been nothing short of a wealth-creation laboratory, a mix of dazzling debuts, volatile corrections, and long-term outperformers that have redefined investor perception of the primary market. 

From tech-driven listings that commanded sky-high valuations to traditional manufacturing and defence companies that steadily compounded wealth, IPOs have evolved from mere short-term trading opportunities into a genuine asset class for capital appreciation. But the key question remains: do IPOs truly help in wealth generation, or are they just a high-stakes bet on sentiment? The data from 2021 to 2025 offers a compelling answer.

Relative Performance of S&P IPO Index vs. Nifty 50 and Sensex 

Over the past five years, the S&P BSE IPO Index has significantly outperformed the benchmark indices, highlighting the strength of India’s primary market and investor appetite for new listings. 

The IPO Index delivered a robust 141.88 per cent return, surpassing both the Nifty 50’s 122.23 per cent and the Sensex’s 113.13 per cent gains during the same period. This outperformance indicates that IPO investors, on aggregate, have been rewarded for participating in new issuances, particularly in high-growth sectors such as manufacturing, defence, and digital platforms.

The IPO Index has exhibited elevated volatility, characterised by pronounced drawdowns during periods of market correction. This was particularly evident in 2022, when valuations of several new-age listings, such as Zomato, underwent significant re-rating, further compounded by events like the Blinkit acquisition. Despite these interim setbacks, the index has demonstrated a strong recovery since mid-2023, supported by improving earnings visibility, more attractive valuations, and renewed participation from both retail and institutional investors.

The divergence between the IPO Index and broader benchmarks underscores a key market trend: while the secondary market has offered stability, the primary market has been a higher-beta play, offering superior returns to investors who managed risk and held through market cycles.

Year-wise IPO Count: Positive Listings and Gains to Date

An analysis of IPO performance from 2021 to 2025 indicates that IPOs have indeed contributed meaningfully to wealth creation, though outcomes have varied by year and market sentiment. 

Out of 345 IPOs launched during these five years, a consistent majority generated positive gains post-listing. 

In 2021, 65.67 per cent of IPOs delivered positive returns to date, supported by abundant liquidity and euphoric market sentiment. The ratio moderated in subsequent years, with 61.54 per cent in 2022 and 58.33 per cent in 2023, reflecting valuation fatigue and global risk aversion. Despite this, IPOs maintained their appeal as over half continued to generate positive long-term gains even through volatile cycles, 56.99 per cent in 2024 and 61.63 per cent in 2025.

Not Every IPO Turns Into a Success Story

The trend suggests that while not every IPO guarantees wealth generation, the segment as a whole has provided above-average returns compared to traditional asset classes. Periods of high subscription and quality listings, especially in sectors like manufacturing, fintech, and speciality chemicals, have significantly lifted aggregate investor wealth. However, the persistence of nearly 35-45 per cent negative performers across years underlines the need for careful issue selection, realistic valuation assessment, and a medium-term investment horizon rather than a purely listing-driven approach.

Performance of Investing in Every IPO Since 2021 (One Lot of Rs 15,000 Each)

If an investor had got a single lot of every IPO since 2021, investing Rs 15,000 per issue across 345 IPOs, the total investment of Rs 51.75 lakh would have grown to Rs 79.74 lakh, yielding a profit of Rs 27.99 lakh and an annualised return (XIRR) of 22.03 per cent. 

The data simply illustrates the potential outcome of consistent IPO allotments over this period, highlighting how the combined performance of all listed IPOs would have translated into meaningful portfolio growth, assuming full allotment and continuous holding since listing.

Statistical overview of IPO returns

Particulars	Returns
Average	54.09%
Median	15.96%
75th Percentile	75.0%
25th Percentile	-14.0%

An analysis of post-listing performance indicates that the average return across all IPOs stood at an impressive 54.09 per cent, suggesting that a few high-performing listings significantly lifted overall averages. The median return of 15.96 per cent provides a more balanced view, showing that half of the IPOs delivered returns above this level, while the other half underperformed. The 75th percentile return of 75 per cent highlights that the top quartile of IPOs generated substantial wealth for investors, whereas the 25th percentile return of -14 per cent reveals that a quarter of the issues traded below their issue price post-listing. This dispersion in returns underscores the importance of selectivity and timing in IPO participation, as performance varied widely across sectors and market cycles.

Record-Breaking Fundraising: Over Rs 5 Lakh Crore Mobilised Through IPOs in Five Years

Between 2021 and 2025, India’s primary market witnessed an unprecedented fundraising spree, with a cumulative Rs 5.18 lakh crore raised through IPO, a clear reflection of growing corporate confidence and strong investor participation. 

The year 2024 stood out as the most active, mobilising Rs 1.59 lakh crore, driven largely by the landmark Hyundai Motor India Ltd. IPO, which alone garnered Rs 27,858.75 crore. In comparison, 2021 and 2025 also saw robust activity, raising Rs 1.18 lakh crore and Rs 1.30 lakh crore respectively, buoyed by mega issues from One 97 Communications (Paytm) and Tata Capital Ltd. The Life Insurance Corporation of India (LIC) IPO in 2022 and Mankind Pharma Ltd. in 2023 further underscored the market’s sectoral diversity from financials and insurance to pharmaceuticals and auto manufacturing. 

This steady flow of large-scale listings not only deepened India’s equity markets but also highlighted a shift toward broader retail participation and institutional confidence in the capital markets.

Top 10 IPOs with Multibagger Returns: These offerings created significant investor wealth, led by Kaynes Technology, delivering gains of over 1,000 per cent.

Top 10 IPOs with Negative Returns

Conclusion:

In conclusion, the evidence from 2021 to 2025 clearly shows that IPOs have played a meaningful role in wealth creation, but not without caveats. While the S&P BSE IPO Index outpaced benchmark indices like the Sensex and Nifty, the performance dispersion across issues highlights that success was far from uniform. 

A select group of quality companies delivered multibagger returns, while nearly a third of listings eroded investor wealth post-listing. The lesson for investors is clear: IPOs can be powerful engines of wealth generation when approached with due diligence, sector understanding, and realistic return expectations. In a market where sentiment can often overshadow fundamentals, disciplined participation, not blind enthusiasm, remains the true differentiator between speculation and sustained wealth creation.

Disclaimer: Data has been sourced from the Chittorgarh website and is provided for educational purposes only. It should not be considered as investment advice.

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