IPOs in India: Hype, Reality, and How to Navigate Them

Same hype, same market.

DMart rewarded patience, up by 1,300% from its ₹299 IPO price to current ₹4,170; Paytm is still 53% below its ₹2,150 issue price!

Can a few pre-listing signals predict which path an IPO will take?

This guide keeps it simple. You will learn:

• What the data says about Indian IPO performance.

• How the IPO process works from filing to listing.

• Why offer prices often get pushed high?

• Pitfalls that trap investors, and how to avoid them.

• A quick checklist to judge any upcoming issue.

Read this before you hit “Apply.” In a few minutes, you will see through the hype and decide if an IPO deserves your money or your skip.

IPO Performance in India: One Year After Listing

If you suspect that many IPOs don’t live up to their hype after the initial buzz, you’re right.

Historically, a large portion of IPOs in India fail to sustain their listing-day prices in the long run.

For instance, nearly half of the companies that went public in FY2024-25 were trading below their IPO issue price by the end of that year.

In practical terms, out of 78 IPOs in that fiscal year, 34 ended below their issue price. Notably, 10 of those had listed at a discount and stayed below, while another 24 enjoyed a positive debut but later wiped out all their gains.

This means many IPO investors saw initial profits evaporate within months.

The trend isn’t limited to one year. Looking at a broader sample, consider recent tech and startup IPOs: only 7 out of 23 startup IPOs over a three-year period traded above their listing price as of the analysis date.

In other words, 2/3rds (over 66%) of those much-hyped new listings were underwater, delivering losses to investors who bought at the debut.

Even when we look at companies relative to their offer (issue) price, the picture is sobering – a study of 101 IPOs from 2024 showed that while 57% were trading above their IPO price, nearly half of those gains were negligible (under 10%), and a full 43% of the new listings were actually below their offer price.

Overall, the odds of an IPO stock staying above its IPO price after a year are far from guaranteed. Many IPOs shine on listing day due to optimism and demand, but thereafter, the realities of business performance and valuation catch up.

The key takeaway: don’t assume every IPO will make you rich in a year – in fact, a good number of them might leave you disappointed if you blindly ride the hype.

Key Points FY 2025:

• The Indian IPO market in FY25 showed resilience despite global volatility, with a slight increase in the number of IPOs compared to FY24 (80 vs 76) and significant capital raised (INR 1,630 billion vs INR 619 billion), indicating strong investor interest overall, albeit with selective performance post-listing.

• Sector-wise, tech and startup IPOs have faced tougher market realities post-listing, explaining the higher fraction trading below their offer prices compared to more established or diversified sectors.

• The IPO market trends in India also reflect global influences such as foreign portfolio investor flows, macroeconomic factors, and regulatory scrutiny that affect post-listing stock performance.

• Emphasizing investor caution and the importance of analyzing fundamentals rather than relying on IPO hype can serve as a valuable takeaway for readers.

The IPO Process: A Step-by-Step Guide

So what actually happens when a company “goes public”?

Let’s demystify the IPO process in India step by step, from a company’s decision to list until its shares start trading on the market:

1. Hiring a Merchant Banker/Underwriter: First, the company appoints a lead manager (usually an investment bank or merchant banker) to manage the IPO. This underwriter guides the company, does due diligence, and essentially quarterbacks the entire process. Think of them as the project manager for the IPO.

2. Drafting the Offer Document (DRHP): The lead manager helps the company prepare a Draft Red Herring Prospectus (DRHP). This hefty document contains all the key information about the company – business model, financial statements, promoters, how the money raised will be used, and the risks involved. It’s like the company’s resume and business plan presented to potential investors. The DRHP is submitted to the Securities and Exchange Board of India (SEBI) for approval.

3. Regulatory Approval: SEBI reviews the DRHP and may ask for clarifications or changes. Once SEBI is satisfied and gives its observations, the company can proceed. The company also applies to stock exchanges (like NSE and BSE) for permission to list. This regulatory vetting process can take a few months, ensuring everything is in order and compliant with disclosure requirements.

4. Marketing (Roadshow): With a green light in hand (and now a final prospectus filed), the company and its bankers hit the road – literally and figuratively. They conduct “roadshows,” which are presentations to institutional investors, analysts, and the media, pitching the investment opportunity. The goal is to drum up interest and gauge demand. This is where the IPO hype often starts building publicly, with news coverage, interviews, etc.

5. Pricing the IPO (Book Building): Deciding on the share price is a critical step. In many Indian IPOs, the book-building process is used: the company and bankers set a price band (a lower and upper price limit) instead of one fixed price. For example, they might say the IPO will price somewhere between ₹100 and ₹120 per share. During the IPO subscription period, investors put in bids stating how many shares they want and at what price within that band. Based on these bids, the “discovered” price will be the one at which the issue gets fully subscribed (this is often the top of the band if demand is high). In some cases, IPOs are done at a fixed price, but book building is more common for medium/large issues.

6. Subscription Period: The IPO opens for a few days (typically 3–4 working days for retail investors in India). During this time, different categories of investors apply: institutional buyers, high-net-worth individuals, and retail investors. Applications are made in lot sizes – a fixed minimum number of shares per lot as defined in the prospectus (say 1 lot = 30 shares, so you apply for 30, 60, 90, etc.). Investors also use the ASBA (Application Supported by Blocked Amount) system, meaning the application money is just blocked in their bank account (not debited yet). Fun fact: If you’ve applied through ASBA, the bid amount stays locked in your account until allotment – you continue to earn interest on it, but you can’t use those funds elsewhere until the IPO process is done.

7. Allotment of Shares: After the subscription closes, the tally is done. If the IPO is undersubscribed (demand < shares on offer, which is rare in good markets), everyone typically gets what they applied for. If it’s fully subscribed or oversubscribed, then allocation happens as per SEBI’s rules. Retail investors, for instance, are often allotted via a lottery if there are more applications than lots available. In cases of heavy oversubscription, you might get only 1 lot (regardless of how many you applied for) or sometimes none at all – essentially a lucky draw if the issue is overwhelmed with applications. The lead manager ensures invalid or duplicate applications are removed and then finalizes the allotment. Once shares are allotted, your blocked money (for the shares you didn’t get) is unblocked/refunded, and for the shares you did get, that portion of money is debited.

8. Listing Day: This is the big day when the company’s shares get listed on the stock exchange and begin trading publicly. The listing price is determined by market demand in the very first auction on listing morning. If the IPO was in hot demand, lots of buy orders may drive the listing price above the issue price (a listing premium). If sentiment is sour or the issue was overpriced, the stock might list at a discount (below the issue price). It’s not uncommon to see a frenzy on Day 1 – often, buy and sell orders pile up, and the exchange has a pre-open session to determine the equilibrium price where trading will start. Once listed, the stock trades freely like any other, and market forces take over from there.

Throughout this process, there are many other players behind the scenes – registrars, who manage the applications and allotment records; stock exchange officials ensuring smooth listing; and so on – but the above steps capture the journey in a nutshell, from a private company to a publicly traded one.

Why IPO Shares Are Often Overpriced?

You might wonder, “If IPOs often struggle after listing, why are they priced so high to begin with?”

The answer lies in human nature and incentives. Company promoters want the highest possible price for the shares they’re selling, and investment bankers (underwriters) also prefer a higher price because their fees often scale with the amount raised.

In essence, when a company goes public, it’s selling part of itself – and just like any seller, it aims to get top dollar. This often leads to aggressive pricing of IPOs, especially in bullish market conditions.

Common sense tells us that in a euphoric market, everyone tends to overestimate the future.

During IPO booms, you’ll hear lines like “This is the next Infosys!” or “Grab it on day one or you’ll miss out!” – creating a fear of missing out (FOMO) among investors. Companies (and their early investors, like venture capitalists) seize on this enthusiasm to justify rich valuations.

An independent market analyst noted that the issue with many large recent IPOs wasn’t a lack of buyers, but “weak returns, often stemming from aggressive pricing”.

In plainer words, these IPOs were priced for perfection, leaving very little upside for new investors. Any small slip in performance, or even just the absence of breathtaking growth, then causes the post-listing price to sag.

We saw this with several Indian tech startup IPOs in 2021–2022. One poster child is Paytm, which went public amid fanfare and a frothy market. The IPO was priced at the top of its range, valuing the loss-making fintech firm at around $20 billion – a valuation many experts felt was exaggerated.

Not surprisingly, once the initial excitement passed, reality set in: investors questioned when (or if) Paytm would turn profitable, and the stock never even traded above its IPO price on listing.

In fact, within one year, Paytm’s stock had wiped out about 75% of its value, marking it as one of the worst large IPO performances globally in a decade.

This wasn’t because Paytm is a terrible company – rather, it’s because the IPO valuation was so stretched that even decent business progress couldn’t support the stock.

As the Economic Times reported, Paytm’s debut came at a time when IPO markets were “enamoured with tech startups” and many of those startups listed at valuations “seen by many as exaggerated”.

In summary, IPOs can be overpriced because sellers want the best price and buyers in a bull market are often overly optimistic. The IPO is priced for a bright future. If that growth doesn’t show up fast, the stock stalls or falls.

This is why many IPO stocks struggle after listing. They simply start off valued to perfection, leaving more room for downside than upside. As an investor, it’s crucial to be alert and not chase the hype.

(Personal perspective: Think of an IPO like a highly anticipated movie release. The promoters spend a lot on marketing and set a steep ticket price (valuation) because they assume it’ll be a blockbuster. But if the movie turns out just okay and not an epic, the initial audience might leave disappointed. The hype doesn’t always match reality.)

Pitfalls and Risks of Investing in IPOs

Investing in IPOs isn’t as straightforward as clicking “buy” on a stock. There are some practical hassles and risks unique to IPOs that every beginner should understand:

Application Amount is Locked: When you apply for an IPO, the money you commit is held in reserve (thanks to ASBA) until the allotment is finalized. While you do earn bank interest during this period, you cannot use that money elsewhere – it’s effectively frozen.

Your money is locked from application to listing, often for about a week. In a fast-moving market, this is an opportunity cost; you might miss other investment opportunities because your cash was tied up in the IPO application.

Uncertain Allotment (Especially for Hot IPOs): IPOs in India are often oversubscribed multiple times, particularly in the retail category. This means if you apply, you may not even get the shares you wanted.

For very popular IPOs, the odds of allotment can be like a lottery. Sometimes every retail applicant just gets the minimum one lot (regardless of applying for more), and in extreme oversubscription, allotment is decided by a computerised draw.

It’s quite possible you tie up ₹200k in an application and end up with zero shares allotted (you get your money back, but you’ve earned nothing on it except minimal interest).

Many small investors open extra demat accounts for their families to improve the odds of getting one lot. That shows how hit or miss allotment is.

When demand is high, getting shares is hard. If an IPO isn’t oversubscribed and is easy to get, ask if demand is weak and if it’s worth applying.

Listing Day Chaos and Volatility: Let’s say you did get the shares. Now comes listing day – a rollercoaster ride. Some IPOs open with a bang, giving instantaneous profit (listing gain).

Others flop out of the gate, opening below the issue price. It largely depends on market sentiment and whether the IPO was priced right. The risk is, if a stock lists at a discount (below what you paid), you’re immediately in the red. You either sell at a loss or hold on, hoping for a turnaround.

For example, in FY25, 10 stocks debuted at a discount and stayed below their issue price through the year  – meaning investors never saw a profit at all.

Even if a stock lists at a premium, the move can reverse. Many first-day pops fade quickly. Selling by allottees or a quick rethink of value can push prices down within days or weeks.

As noted earlier, many IPOs that enjoyed strong listing gains in 2024 eventually gave up those gains – 24 companies that initially traded above their IPO price later fell back below that level within the same fiscal year. In short, a great Day 1 doesn’t guarantee a great Day 365.

Market Conditions Can Flip: IPOs often hit the market during bullish phases (companies try to take advantage of upbeat sentiment). But if the market mood turns sour, say due to a global event or domestic policy change, between the IPO and a few months post-listing, the stock can tank irrespective of its fundamentals.

Recent history shows several IPOs from late-2021 that listed at high valuations right before a market correction; by mid-2022, many were trading far below their issue prices as overall sentiment turned cautious. Timing luck plays a part.

Psychological Pressure: IPO investing can mess with your psychology. There’s the FOMO before listing (“Everyone’s applying, I should too!”), followed by the adrenaline of listing day (“Should I sell at this profit or will it go higher? What if it doubles? What if it crashes?”).

If you get no allotment, you might feel frustrated seeing it list at a premium. If you did get an allotment and the stock doubles, you might greedily hold on for even more, or conversely, sell too early and regret. If it tanks, you’re stuck deciding whether to cut losses or hope for a rebound. In short, IPOs create event-driven stress that seasoned investors learn to manage, but beginners can find nerve-wracking.

To sum up this section: IPOs are not a free lunch. There are logistical inconveniences (locked money, lottery-like allotment) and significant market risks (volatile listing, post-listing slumps).

Many retail investors imagine IPOs are a quick profit hack – apply, get shares, sell on day one at 50% gain. Sometimes that does happen, but plenty of times it doesn’t.

Your funds could sit idle only for you to get no shares, or you could get shares and then watch the price fall. Always go in with eyes open, only committing money you’re okay having locked up – and potentially okay losing if things go south.

How to Evaluate an IPO: Due Diligence for Investors

Now for the important part: if you’re considering investing in an IPO, how do you decide if it’s worth it?

Just because an IPO is popular doesn’t mean it’s a good investment (and just because it’s not making headlines doesn’t mean it’s bad either).

Here are some key due diligence steps and factors to consider for any IPO, explained in simple terms:

Read the Prospectus (DRHP/RHP) Thoroughly: This is non-negotiable. The prospectus is a treasure trove of information about the company. It will tell you what the company does, its business model, industry, strengths, risk factors, financial statements, how it plans to use the IPO money, and any legal issues or liabilities.

Pay special attention to the Risk Factors section – it’s often long and detailed, but it’s basically management telling you “here are all the things that could go wrong.”

Also, look at what the funds will be used for: funding growth vs. paying off debt vs. shareholders cashing out.

If a large portion of the IPO is an Offer for Sale (OFS) by existing shareholders, it means insiders are selling – not necessarily a deal-breaker, but ask yourself why they’re selling now. The more you understand the company’s story and numbers, the better equipped you’ll be.

Assess the Company’s Fundamentals: Don’t buy just on brand name or hype – dig into the fundamental metrics. Is the company profitable?

If yes, is it consistently profitable or barely so? If not, what is the path to profitability? Look at revenue growth rates, profit margins, and debt levels over the past few years (the prospectus will have several years of financial data).

A company with steady revenue growth, improving profits, and manageable debt is obviously preferable to one with erratic performance or huge losses .

Also, consider the sector – for example, a company might be the market leader in a niche field versus a small player in a crowded space. A strong market position and competitive advantage make a big difference in long-term success.

Evaluate the Valuation: This is where many investors slip up. An IPO can be a great company but a poor investment if the price is too high. Look at traditional valuation metrics like price-to-earnings (P/E) ratio, price-to-sales, price-to-book, etc., as applicable.

The prospectus often provides some comparison of the company’s valuation to listed peers. If not, you can calculate: for example, if a company earned ₹10 per share last year and the IPO is priced at ₹200, that’s a P/E of 20.

Check what P/E similar companies trade at. If peers are around 15 and this IPO asks 20, it’s a bit high; if peers are 30, maybe it’s reasonable.

Be extra cautious for companies with no profits – then metrics like P/E don’t exist and you have to use things like revenue multiples, which are trickier.

Also, consider the market cap the IPO implies and ask, “Is this realistic for what the company does?” Overpricing signs include valuations that assume a huge future growth or are out of whack with peers.

If an IPO looks overpriced relative to its fundamentals, that’s a red flag – it may struggle to hold its price later. One guide is also to see how much of the IPO is primary (new shares) vs. secondary (shares sold by existing holders).

If it’s mostly secondary and priced very high, it suggests insiders want out at a top valuation – not a great look for new investors.

Market Sentiment and Timing: Consider the broader market conditions. In a roaring bull market, even sketchy IPOs can sail through (though they may crash later). In a bearish market, even good companies might get lukewarm reception.

Gauge the sentiment – are people bidding crazy amounts in grey market (unofficial market for IPO applications)? Is the IPO hugely oversubscribed or barely covered? Extreme frenzy could indicate overvaluation, whereas no interest might indicate either a dud or just poor timing.

While you shouldn’t follow the crowd blindly, it’s useful to know what the crowd is doing. Also, if the market as a whole is near all-time highs and IPOs are raining every week, be aware this could be a bubble-like scenario where a reckoning might follow.

Promoter and Management Quality: Do a quick check on who’s running the company. Promoters’ track record, any past scandals or governance issues, the experience of top management – these qualitative factors matter.

A trustworthy, competent team can steer a company through tough times, which is good for long-term investors. The prospectus will have bios of key people and any legal cases. A company with a history of corporate governance red flags or promoter disputes is riskier.

Purpose of IPO: We touched on this but it’s worth reiterating. Raising money to expand plants, enter new markets, or pay down debt to strengthen the balance sheet – these are constructive uses.

On the other hand, if a major chunk of the IPO is just existing private equity investors selling shares (OFS) and the company isn’t actually getting much money to grow the business, think twice.

It might still be fine if the business is solid, but you know that those selling shareholders expect limited upside from here (otherwise, why sell?). IPOs where promoters sell a lot of stake can sometimes signal they think the price is right (or rich).

Anchor Investors and Institutional Appetite: A day or two before the IPO opens, companies disclose anchor investors – usually large institutions that commit to buy shares at the IPO price.

If you see big-name domestic mutual funds or foreign institutional investors in that list, it’s somewhat reassuring (they did their due diligence too). If an IPO struggles to attract anchors or only attracts obscure ones, that’s a caution sign.

Similarly, if the QIB (institutional) portion of the book isn’t getting fully subscribed, beware – retail should not assume they’re smarter than the pros. Ideally, an IPO should have healthy demand from informed investors, not just buzz among retail.

Diversify and Size Your Investment: Finally, remember that IPOs are inherently risky – more risky than established listed firms, generally – so treat them accordingly in your portfolio. Don’t bet the farm on a single IPO or make IPOs a huge portion of your investments.

It’s wise to invest only a portion of your capital in IPOs and spread your bets. Many advisors suggest that if you’re a beginner, you might even skip IPOs entirely until you gain experience, because it’s like the Wild West of stock investing.

If you do participate, maybe limit to companies you really understand and have conviction in. And never invest just because “everyone is doing it” – that’s when you need to be the most careful.

In short, do your homework as if you were going to buy the whole business, not just a stock to flip. As one finance article succinctly put it: evaluating an IPO requires a multi-faceted approach – study the market, the company, the financials, and the valuation deeply before making your decision.

The more boxes an IPO ticks (good industry, good growth, fair valuation, solid management, etc.), the better your odds. And if too many boxes are blank, it’s perfectly okay to pass on the IPO – there will always be another opportunity in the market.

Case Studies: A Successful IPO vs. a Failed IPO

Let’s bring all this together by looking at two real-world IPO examples in India – one that turned out to be wildly successful for investors, and another that left investors high and dry. Understanding these stories will put the above points in perspective.

Successful IPO Case Study: Avenue Supermarts (DMart) – The Multibagger Retailer

If you’re looking for an IPO success story in India, DMart is often the poster child.

Avenue Supermarts, which operates the DMart supermarket chain, went public in March 2017 with an issue price of ₹299 per share.

The company was already profitable and known for its efficient business model (discount retail stores). The IPO was a hit from day one – the stock doubled on listing, closing with a ~102% gain over the IPO price.

But unlike many IPOs that fizzle after an initial pop, DMart kept going strong. The company continued to grow its profits and open new stores, and investors’ confidence remained high.

Those who held onto their IPO allotment saw extraordinary returns over the next few years. By early 2023 (six years later), DMart’s stock had risen roughly 450% above its IPO price. (At one point in 2021, it was even higher – the stock hit an all-time high around ₹5,900, which was nearly a 20x from the IPO price, before cooling off a bit in 2022–23.)

Even at 450% up, that’s a fivefold increase, turning a ₹10,000 investment at IPO into about ₹55,000. Few investments give that kind of return.

Why was DMart’s IPO so successful?

A few reasons stand out:

(1) The valuation at IPO was actually reasonable for a high-growth retail company (around 30x P/E, which in hindsight left room for upside as earnings grew).

(2) The company’s fundamentals were strong – it was consistently profitable, which set it apart from many other IPOs that were burning cash.

(3) The sector (consumer grocery retail) was large and offered long runway for expansion, and DMart had a proven model to capitalize on it.

(4) There was relatively low float (not too many shares in public), so as investors scrambled to buy into this quality company, demand outstripped supply.

Essentially, DMart’s IPO balanced the interests of the company and investors well – the promoters sold a stake at a fair price, leaving gains on the table for new investors who believed in the growth story. It wasn’t an overhyped “greed” pricing; one could argue it was even slightly underpriced given the massive oversubscription.

This aligns with the earlier point: a fundamentally good company at a not-too-aggressive IPO price can result in big wins for investors. DMart today is a respected blue-chip stock, and its IPO is remembered as a case of “if you got it, you minted money.” 

(Personal note: Many folks who missed the DMart IPO or sold early still lament it – it’s often cited as a lesson that if you truly believe in a business, hold it for the long term rather than flipping on listing day.)

Failed IPO Case Study: One97 Communications (Paytm) – The Overhyped Tech Debacle

On the flip side, let’s revisit Paytm’s IPO, which has become almost a textbook example of IPO hype gone wrong in India.

Paytm’s parent, One97 Communications, launched its IPO in November 2021 amid enormous buzz.

It was India’s largest-ever IPO at the time, looking to raise about ₹18,300 crore (roughly $2.4 billion). The issue was priced at ₹2,150 per share – a valuation that implied a market cap of over $20 billion for a company that was not profitable and facing stiff competition in the fintech space.

The IPO did get subscribed (helped by institutional and strategic investors), but many analysts had flagged that the price seemed unreasonably high given Paytm’s financials. Those warnings proved prescient.

On listing day, the stock plunged: Paytm opened around 9% below the issue price and by the end of the day had fallen ~27% below the IPO price.

It was one of the worst debut-day performances for a major IPO in recent memory. And that was just day one. The slide continued in subsequent weeks and months.

One year after the IPO, Paytm’s share price was down about 75% from the issue price, erasing three-quarters of the investors’ wealth. It earned the unfortunate distinction of being the world’s worst first-year performance for an IPO of its size in a decade.

What went wrong?

In simple terms: overvaluation and unmet expectations.

Paytm’s IPO came at the tail end of a big bull run, when tech startups were the craze. The company and its bankers priced it for perfection – assuming years of rapid growth and eventual strong profits.

But as a publicly traded stock, Paytm faced intense scrutiny. Investors quickly soured on its steep losses, unclear path to profitability, and the tough competition from global giants and other upstarts.

To make matters worse, not long after listing, global tech stocks also started tumbling (with interest rates rising, the appetite for loss-making growth stocks diminished).

Paytm got caught in that downdraft. Confidence was further shaken when a major pre-IPO investor (SoftBank) reduced its stake after the lock-in period, and news of potential new competitors (like Jio’s payments) emerged.

All of this led to a continuous sell-off. Essentially, Paytm’s IPO is a case of a highly anticipated offering that failed to deliver any gains to retail investors – those who bought at ₹2,150 never saw that price again for a long time post-IPO.

The stock “never traded above the listing price” even on day one. It underscores the earlier lessons: a beloved brand or big issue size doesn’t guarantee a good investment. If the IPO price builds in unrealistic optimism, the stock’s performance can disastrously disappoint.

For investors, the comparison between DMart and Paytm is instructive. With DMart, the company’s strengths and a fair issue price created a win-win. With Paytm, the company’s uncertainties and an excessive issue price led to pain all around. It teaches us that doing our homework on fundamentals and valuation is key – and that sometimes, skipping an overhyped IPO is the smartest move.

(Interestingly, after the crash, Paytm’s management had to focus hard on turning the business toward profitability to win back investor trust. The stock has recovered some ground from its lows, but as of this writing it’s still well below the IPO price. Many IPO investors had to take large losses or are still waiting for a turnaround.)

Conclusion: IPOs – Not a Guaranteed Jackpot, But Just Another Investment

IPOs are often marketed like glamorous red-carpet events of the stock market – and it’s easy to get tempted to join the party.

After all, who doesn’t want to boast about getting in early on the “next big thing”?

However, as we’ve seen, reality often diverges from the hype. In India, a significant number of IPOs over the past decade have failed to reward investors in the long run, with many stocks sinking below their issue prices after the initial buzz. IPOs can make you money, yes, but they can also burn you just as easily.

For beginners and intermediate investors, the prudent approach is to treat IPO investing with a healthy dose of scepticism and caution.

Don’t buy into an IPO just because everyone on TV or social media is raving about it. Do your own research: understand the business, read the prospectus, and crunch the valuation numbers.

Ask yourself: Would I buy this company at this price if it weren’t an IPO? If the answer is no, then resist the FOMO – you’re likely not missing out on a miracle.

Remember, once the IPO is done, the stock will be available in the market; you can always choose to invest later when there’s more information and the price has settled, even if it means paying a bit more or missing the initial pop. It’s better to miss a 50% pop than to catch a 50% drop.

Also, be mindful of the risk-reward tradeoff. IPOs can offer quick gains (some people do flip listing gains regularly), but they also carry unique risks as we discussed.

If you decide to play the IPO game, maybe try with smaller amounts first, get a feel for the process, and never bet money you can’t afford to lock up or lose. Think of it as a side strategy, not your main investment plan.

In the end, investing is about growing your wealth steadily. IPOs are just one of many paths to do that – and not necessarily the easiest one.

Seasoned investors often say, “The stock market is a place where the transfer of wealth goes from the impatient to the patient.” With IPOs, patience might mean waiting for the right opportunity and being selective, rather than rushing into every new listing.

To wrap up:

IPOs aren’t inherently “good” or “bad” – they’re opportunities that need careful evaluation.

Some will be gems, many will be duds.

By understanding the IPO process, recognising why companies might overprice their shares, being aware of the pitfalls, and doing thorough due diligence, you can improve your odds of picking the gems and avoiding the duds.

And if you ever feel unsure, there’s no harm in sitting out an IPO – there will always be another stock on another day. Investing is a long journey; you don’t have to catch every bus. Stay informed, stay rational, and you’ll do just fine!