A number of high-profile IPOs in 2025 failed to live up to investor expectations, with several seeing steep declines on listing or in the months after debut. These flops provide valuable lessons for investors about overvaluation, market timing, and business fundamentals.
Overview
2025 saw a surge in IPO activity, but a significant share of listings delivered negative returns on debut or quickly slipped below issue price. Companies from tech, energy, and financials led the list of disappointments. Poor post-listing performance even after heavy oversubscription highlighted deeper issues in offer pricing and investor optimism.
Offer snapshot
- Over 20 of the 44 large-cap 2025 Indian IPOs ended below issue price on listing day.
- Global markets also saw sharp listing-day declines in big IPOs—especially among speculative growth and tech plays.
- In India, examples include Jaro Institute (down 16.3% on debut), Arisinfra Solutions (down 21%), Seshaasai Technologies, and Solarworld Energy (down ~8%).
- Internationally, names like Cre8 Enterprise and Accelerant Holdings dropped 40–87% vs their IPO price in the months following listing.
Financials
- Some IPOs drew strong subscription (23x–70x), but failed to sustain momentum—Jaro Institute raised ₹890 crore, Seshaasai ₹813 crore, with both ending below their offer price.
- Companies with high debt or unclear profit paths saw the steepest falls as investors re-assessed risks post-listing.
- Several listings—especially in midcap and SME segments—lost 15–35% in value within weeks post IPO, impacting retail investor confidence.
Business highlights
- Capital-intensive or rapidly scaling firms like Delhivery and OYO faced the toughest investor scrutiny, with issues around governance, profitability, and business models catching up after debut.
- Aggressive global expansion, accounting irregularities, and regulatory warnings compounded reception issues for some IPOs.
- Stretched valuations relative to historical peers led to quick corrections as secondary market sentiment turned cautious.
Use of proceeds
- Many flops were marked by vague or generic disclosures on how IPO proceeds would be deployed. Poor communication around growth plans or heavy working-capital use spooked investors.
- Margins for error were low—use of IPO funds for aggressive expansion or debt repayment without a clear profitability plan saw investors bail out.
Risks
- Over-subscription does not guarantee success: Several of the worst performers saw strong retail, NII, and QIB participation, but faltered on weak operational transparency and stretched IPO pricing.
- Global macro: Unfavorable market environments, elevated rates, or sector sell-downs can quickly turn IPO sentiment.
- Corporate governance, legal, and regulatory rumbles were common red flags in the largest flops.
What to watch next
- Shift in investor behavior: Increasing focus on profitability, governance, and realistic pricing in post-2025 IPOs.
- Stricter SEBI guidelines on DRHP disclosures and post-IPO monitoring may curb speculative issues.
- Watch continued volatility in tech, SME, and asset-heavy sectors as lessons from 2025 shape new issues and investor screening.
FAQs
- Which IPO had the worst listing in India in 2025?
Arisinfra Solutions saw a 21% drop on debut, making it the worst big-ticket Indian flop by listing-day loss. - Why did highly subscribed IPOs flop?
Aggressive pricing amid weak fundamental clarity and vague use of proceeds led to corrections despite high demand. - What warning signs should investors watch?
Overvaluation, unclear growth strategy, red flags in governance, and market euphoria are key risk signals. - Are post-listing declines unique to India?
No—global IPO markets in 2025 saw similar trends, with many US and Asian IPOs falling well below their offer price in weeks. - What lesson is clearest for 2026 IPO investors?
Prioritize fundamental analysis over hype; demand detailed business plans and reasonable pricing.
It’s fascinating how market optimism can turn so quickly after an IPO. High subscription rates are one thing, but these firms really need to back up their promises with solid fundamentals to avoid steep post-listing declines.