Pre-initial public offering (IPO) investors achieved optimal risk-adjusted returns by exiting during the lock-in expiry window rather than maintaining long-term positions, data showed in a white paper by Client Associates.
It analysed 25 new age technology companies listed since 2021. According to it, while companies with unfocused business models experienced immediate market scepticism and delivered negative returns after the six month lock-in period, those with strong retail appeal have generated exceptional short-term returns.
Short-term winners after lock-in expiry
Paytm and CarTrade shares had fallen over 60% in six months after getting listed while Mobikwik and Ola Electric nearly 30%. Overall, 11 out of 21 companies delivered positive alpha at the (six-month) lock-in expiry. Nykaa rose the most by 320% followed by Awfis Space Solutions that rose 174%, and Nazara Tech 140%.
Over the long-term from its issue price to June 15, these returns have fallen significantly and only nine out of 25 companies have generated positive alpha over the BSE 500 index. Ola electric is trading nearly 39% lower than its issue price, First Cry nearly 19%, Yatra 22%, and Nykaa nearly 4%.
Long-term performance disappoints
“Between 2020 and 2025, a surge of tech-led companies—fuelled by digital adoption, favorable demographics, and strong capital inflows—entered public markets, shifting the IPO landscape away from its traditional industrial and BFSI roots,” the paper said. “However, this transition coincided with unprecedented liquidity, speculative retail participation, and a narrative-driven investing cycle, where business fundamentals were often sidelined.”
High-profile IPOs such as Paytm and Ola Electric have failed to live up to the hype and have not delivered returns to their investors, due to factors ranging from overvalued IPOs to loss of market share to listed peers post-listing, it said and added only 32% of companies generated long-term outperformance, highlighting the challenge of identifying winners after the hype fades.