Welcome to yet another edition, chief!

In today’s edition — Promoters who believed their companies’ valuations were high used the primary markets in 2025 to offload stakes. Markets have now pushed back, punishing issues that offered exits to stakeholders instead of business expansion. As a result, many IPO investors are deep in the red because some of their bets have fallen by as much as 70%.

New Listings Faced Big Declines in 2025

Vishwas Ved

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

The quote by Paul Samuelson, the first American to win the Nobel Prize in Economics in 1970, is often repeated to preach the virtues of staying in the investment game for the long term. And it works most of the time. 

But there are periods when it doesn’t. For a recent example, look at the dismal performance of the IPO market in 2025. 

A large number of IPOs are below their issue price, and many have fallen considerably even as the benchmark indices hit an all-time high just last month. 

Sanjeev Prasad of Kotak Institutional Equities has attributed this disappointing performance of primary issues to the way companies are using the proceeds of IPOs. 

He recently told CNBC TV18 that companies had raised nearly $100 billion in the past five years, of which 40% were just ‘offer for sale’. That means promoters cashed out and pocketed $40 billion because they believed that the valuations were high. 

Of the remaining 60%, only 15% of the money went into capacity expansion, while the rest of the proceeds were used to retire debt or provide working capital, he pointed out. 

This shift in how primary market proceeds are used by companies changes the meaning of an IPO. A public offer is expected to support the company’s next phase of growth. But when the funds are not used for expansion, stocks fall after listing. 

That’s what has happened to most IPOs from 2025. Interestingly, these declines are not limited to certain months or sectors. They are seen across industries and market sizes. 

Brutal Cuts in SME Segment

The most severe losses are in the SME segment. A handful of companies have dropped by 70% or more soon after listing. 

This includes Studio LSD, Super Iron Foundry, Swasth Foodtech India and Valencia India, which saw the largest fall in this group. 

These declines indicate that the market did not accept the offer prices once the companies listed.

Another set of SME names has seen declines in the 50-60% range. This group includes Arunaya Organics, ATC Energies and Citichem India, along with a few others that have lost more than half their value. 

Beyond these extreme cases, there is a group of mid-sized and smaller firms that have crashed between 30% and 50%. This includes companies across manufacturing, logistics, chemicals, and services. 

Shining Tools fell by 42%, while Chiraharit and Glottis both slumped 50%. Similarly, Om Freight Forwarders slipped more than 30%, and BMW Ventures also declined by a similar margin. Likewise, Solvex Edibles and Rukmani Devi Garments have both lost more than a third of their value.

Listings from earlier in the year also show the same trend. Sampat Aluminium and VMS TMT sit in the 30–40% bracket, while Galaxy Medicare fell by over 60%. Cedaar Textile and Marc Loire also saw drops in the 40-50% range. 

The pattern that stands out is that many of these companies did not present any clear expansion plans at the time of listing. 

Shifting Investor Behaviour

The declines establish a key point that when an IPO is launched only for liquidity rather than for building new assets, the company enters the market without commanding higher value. 

Investors usually want to know how companies are going to use fresh capital for their future growth. And when that information is vague or absent, prices do not hold. 

Also, the steep fall in prices does not necessarily mean that every offer was overpriced. It only means that the market is paying more attention to the purpose of the issue and the use of the funds. 

This change in investor behaviour is important for companies planning to list next year. Issues that present concrete plans and clear growth strategies may continue to find takers. Others, however, may struggle to find a warm welcome..

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