The 326% return secret: Inside the 2025 IPO tsunami and where the real money is hiding now

2025 will go down in Indian history as a  momentous one for the primary market. For the first time ever, India saw two consecutive years of all-time high IPO fundraising, with 103 corporates mobilising Rs 1,75,901 crore. This was a 10% jump over the previous record set in 2024.

From the mega-entry of Tata Capital, which raised Rs 15,512 crore, to the household buzz of LG Electronics India and its Rs 11,605 crore debut, the scale of capital was unprecedented. Yet, beneath these skyscraper-sized numbers, a quiet change is taking place: the “quick flip” strategy that retail investors have relied on for years is failing. If you are waiting for the listing day “pop” to make you rich, the data suggests you are looking at the wrong clock.

The 2026 IPO watchlist

Even after a record-breaking year, the flow of new IPOs is far from slowing. According to data compiled by Prime Database, 2025 saw an all-time high of 249 companies filing offer documents with SEBI, compared with 145 companies in 2024. At the same time, the report notes that not every company moved ahead, with 11 companies allowing approvals to lapse, 17 companies withdrawing their offer documents, and SEBI returning the offer documents of eight companies during the year.

Despite these withdrawals, the forward pipeline remains substantial.

As per Prime Database data:

• 96 companies, proposing to raise around Rs 1.25 lakh crore, have SEBI approval and are waiting to enter the market
  
• 106 companies, looking to raise about Rs 1.40 lakh crore, are awaiting SEBI approval
  
• Out of these 202 companies, only seven are new-age technology companies (NATCs), proposing to raise roughly Rs 22,500 crore
  

Beyond this approved and pending pipeline, the Prime Database also points to a fresh wave of filings. The report states that 85 new-age technology companies are preparing to file offer documents, with a combined fundraising target of around Rs 1.50 lakh crore.

Commenting on the outlook, Pranav Haldea, Managing Director of Prime Database Group, said:

“If valuation discipline is maintained by issuers and the secondary market continues to remain stable, even if not bullish, the next few years can be a golden era for India’s IPO market.”

The report added that the sheer volume of companies preparing to access the market indicates sustained interest in equity fund-raising, even as investors have become more selective and short-term listing gains have moderated. 

The Listing Day Trap: A 20% Drop in Instant Gratification

 One of the most defining trend for the average retail investor in 2025 was the collapse of listing day gains. In 2024, the average listing gain stood at30%. In 2025, that figure plummeted to just 9%.

However,  few outliers gave investors a reason to cheer – Highway Infrastructure delivered75% gain on listing day and Urban Company saw a 62% surge the broader reality was stark. Only 36% of IPOs gave a return of over 10% on their debut, compared to 67% of IPOs the previous year. Even heavyweight names like Tata Capital saw a muted debut, offering almost nothing to those hoping for a fast profit. For many, the party ended before it even began.

The 326% return secret: Where the real wealth is hiding

If listing day is becoming a disappointment, why is the market still breaking records? The answer lies in long-term absolute returns, which debunk the myth that IPOs are always overpriced.

According to data from Prime Database, the real reward belongs to those who stay the course. The findings show that the average absolute return for IPOs launched in 2020 has reached a massive 326% by the end of 2025. This trend of compounding continues across the years:

• IPOs from the class of 2021 have delivered a 116% overall average return till 2025 end,
• The 2022 cohort has seen a 71% overall average return by 2025 end.
• The 2023 IPOs, towards the end of 2025, have given an average overall return of 49%.

Meanwhile, till 24 December 2025, main board IPOs delivered an average return of 8% till December 24, 2025, even though the average listing-day gain was higher at 10%.

2025 Breakdown: The heavyweights and the high-flyers

While 103 companies debuted on the main board, a handful dominated the narrative and the capital.

Retail Fatigue: Why 4 Lakh Investors Stayed Away

The cooling of instant profits has directly impacted retail enthusiasm. The average number of retail applications dropped significantly to 14.99 lakh in 2025, down from 18.87 lakh in the preceding year.

Even the “Mega Response” issues those subscribed to over 10 times saw a dip, appearing in only 60% of IPOs compared to 72% in 2024. Retail oversubscription also cooled from 34 times to 24 times, signalling that investors are becoming more selective as the easy money disappears.

Follow the Smart Money: A Shift in Power

While retail investors grew cautious, the institutional dynamics saw a historic change. For the first time, local Mutual Funds overtook Foreign Portfolio Investors (FPIs) as anchor investors, contributing 14.44% of the issue amount compared to the 13.99% from FPIs.

Interestingly, while FPIs were massive sellers in the secondary market, offloading Rs 2.30 lakh crore, they remained bullish on new companies, pumping Rs 73,000 crore into the primary market in 2025.

The SME Paradox: 9 Percent Gains vs. 1050 Percent Growth

When SME companies listed on the stock exchange in 2025, the profit investors made on the very first day was much lower than the profit made by investors in 2024.

• In 2024, SME IPOs gave an average first-day gain of 60%
  
• In 2025, SME IPOs gave an average first-day gain of 12%

In fact, 133 out of 267 SME IPOs actually traded below their issue price on the first day.

However, the long-term data for SMEs is even more stunning than the main board. The average return for SME IPOs from 2020 stands at a jaw-dropping 1050%. This confirms that in the small-cap space, the listing day price is merely a distraction from the exponential wealth created over a five-year horizon.