Short-Term Performance of Indian IPO: An Empirical Study

Abstract

This study focuses on analyzing the short-term performance of selected Initial Public Offerings (IPOs) between 2022 to 2024. The aim of the study was to research the determinants of listing performance and listing gains and examine how are IPOs generating value for investors in the Indian IPO scenario. This study used a quantitative methodology and relied on secondary data provided by official stock exchanges of India such as National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), as well as by the IPO prospectus, market reports, and further information derived by author’s calculation based on the secondary data from the said sources. The analysis included the short-term performance of IPOs from varying sectors to understand the performance thoroughly, this study focuses on returns generated by selected IPOs on their listing day, 1-week post issue, and 1-month post-issue. The results reflect majority of selected IPOs generally produced positive average listing day returns of approximately 50%; further the IPOs tended to continue producing significant returns over the course of 1-week and similarly 1-month solidifying the short-term performance. The analysis also suggests that large subscription multiple, strong retail participation, and a positive market perception positively affected listing gains. Further research also revealed that Grey Market Premium (GMP) proves to be an acceptable and reasonable indicator for understanding pre-listing market sentiment, even though inconsistency was observed while comparing the GMP and actual listing gains, it still proved to be very consistent with the direction of the listing gains. Overall, the study concluded that the idea of short-term IPO performance in India is primarily driven by demand factors such as subscription data, retail and institutional participation, and other identifiable variables. The study provides valuable information and interpretation of Indian IPO short-term performance and insights for retail investors evaluating potential short-term gains by using available data and considering all mentioned variable and factors.

Introduction

Between 2022 and 2024, the Indian primary equity market saw strong growth, driven by increased retail investor participation and a steady stream of IPOs across diverse sectors. Improved digital access, simplified UPI-based IPO applications, and greater financial awareness encouraged a broader investor base. Listing gains—profits earned on the first day of trading due to IPO underpricing—remained the main motivation for retail investors, though short-term returns varied widely based on factors like subscription intensity, grey market premium, issue size, sector, and market sentiment.

Empirical analysis of 8–10 IPOs during this period showed average listing-day returns of ~50%, one-week returns of 74%, and one-month returns of 89%, with standout performers including Tata Technologies, IREDA, Cyient DLM, and BLS E-Services, which had strong subscription levels and high retail/institutional participation. Conversely, LIC and Honasa Consumer saw weaker short-term gains due to lower subscription intensity despite market conditions.

The study concludes that IPO short-term performance is highly demand-driven, with higher oversubscription and investor enthusiasm correlating with stronger listing-day and early trading gains.

Conclusion

This study researched the short-term performance of selected IPOs listed between 2022 and 2024 with the key goal of identifying patterns and trends in listing gains and understanding the key factors influencing early post-listing returns. The empirical findings suggest that short-term IPO performance in Indian primary market is largely demand-driven rather than being random or unpredictable in nature. The study reveals that IPOs generated substantially positive average returns across listing day, one-week, and one-month periods, suggesting that the Indian IPO market during the study period provided favorable and strong short-term opportunities for investors. However, performance varied significantly across companies, reflecting that listing gains are influenced by multiple interacting variables and factors rather than market timing alone. The study further included the analysis of GMP which establishes that GMP functions as an effective indicator of market sentiment rather than a precise predictor of returns. While deviations between GMP and actual listing gains were observed, it stayed strong with the sentiment of the listing. Overall, the findings of the research study indicates that successful short-term IPO investments decisions require study and evaluation of demand indicators such as subscription data, retail participation and sentiment, and the prevailing market outlook towards the IPO instead of relying solely on issue size or company reputation/goodwill. The research contributes to understanding post-Covid IPO dynamics in India and provides practical insights for retail investors seeking to participate strategically in the primary market. In conclusion, short-term IPO performance in India reflects identifiable behavioral and market-driven patterns, emphasizing the role of informed analysis in enhancing investment decision-making within the evolving Indian capital market ecosystem.

References

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Copyright

Copyright © 2026 Yash Jain, Sushant Bagul, Sanket Patel, Rishika Binani. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.