A company enters the securities market through an IPO- Initial Public Offering. IPO share prices often swing wildly in the first few weeks of listing. It’s a high-risk investment—you can quickly multiply or lose your money. The selection is not as easy as applying filters on stocks screener but it relies on multiple analyses.
In the history of the Indian stock market, some IPOs have doubled investors’ money on the day of listing, while others have wiped out their wealth entirely. Think again if you expect every IPO to list at a considerable premium.
Many big names have fallen flat, causing significant losses. There’s a lot to learn from both the successes and failures of past IPOs. In this article, we’ll explore recent IPOs that made big money and those that quickly faded away.
IPO Success Stories:
You may wonder why some companies thrive while others don’t. In the IPO world, timing is crucial. Even a financially stable company needs to consider market conditions. Take Zoom, for example. It went public in April 2019, just as the pandemic made remote work essential, leading to massive success for Zoom in the following months.
Innovation also plays a big role in IPO success. Peloton’s 2019 IPO succeeded due to its fresh take on fitness. Brand recognition is another key factor. Though private before its 2019 IPO, Uber was already widely known—finally, a company’s financial health matters. Successful companies tend to be financially robust both before and after their IPO. Let’s see some of the successful IPOs of the Indian securities market:
Hariom Pipes Industries IPO:
Hariom Pipes Industries launched its IPO in March 2022, priced between Rs 144 and Rs 153 per share. Today, the stock is valued at Rs 544.5 on the BSE, delivering a multi-bagger return to investors.
The Rs 130-crore IPO was subscribed 7.93 times. Hariom Pipes manufactures steel MS pipes, scaffolding, HR strips, MS billets, and sponge iron, with a strong distribution network across south India. The company’s profits increased in FY21 compared to FY20, and factors like higher steel demand and the government’s anti-dumping duty have contributed to its stock’s impressive rise.
Infosys 1993 IPO:
Infosys, now a major IT giant, launched its small IPO in 1993 at Rs. 95 per share. Surprisingly, it was initially undersubscribed. Morgan had to buy a 13% stake in the company to ensure the deal went through. However, this undersubscription didn’t hold Infosys back.
Its success story perfectly shows how strong fundamentals and visionary leadership can drive tremendous growth. Under Narayana Murthy’s guidance, Infosys focused on efficiency, competency, and innovation while maintaining transparency with its investors. This approach built investor confidence and boosted its reputation globally, leading to a steady rise in stock prices over the years.
The D-Mart IPO:
Avenue Supermarts, the parent company of D-Mart, launched its IPO in March 2017. Priced at Rs. 299 per share, the issue was oversubscribed by over 100 times. Investors were drawn to D-Mart’s solid business model, which was built on offering low prices, high stock turnover, and an efficient supply chain.
What stood out to investors was the company’s focus on high profitability, even during its rapid growth. Today, Avenue Supermarts is one of India’s most valuable retail companies, highlighting the significance of creating a solid brand and having effective operational strategies.
IPOs That Went South:
When an IPO flops, the stock price drops below the opening price on the first trading day. The next day, trading might pick up, boosting the share price, or it could flatline. In the worst case, it could crash further. This is disappointing for both company executives and investors hoping for a win. Despite the buzz around IPOs, success isn’t guaranteed. An IPO failure can also happen when a planned IPO is canceled due to company issues or lack of investor interest. Learning about failed IPOs offers valuable lessons and can help you avoid mistakes when investing in the next “big thing.”
Paytm IPO:
Paytm’s Rs.18,300 crore IPO didn’t meet expectations on listing day. The parent company, One97 Communications Ltd, saw a 27% drop in its share price from the listing price of Rs.2,150. Paytm has faced tough competition in India’s digital payments space, with major players like PhonePe, Google Pay, Amazon Pay, and WhatsApp Pay dominating the market. Profitability has also been challenging as the company still struggles due to high marketing and sales costs. Additionally, its stretched valuations added to the difficulties that led to the IPO’s failure.
LIC IPO:
LIC’s IPO was one of the biggest disappointments in 2022. Launched in May, its price band was Rs.902-949. However, LIC shares opened at a discount—Rs.872 on NSE and Rs 867.20 on BSE. Currently, they trade around Rs.547 on NSE and Rs.548 on BSE. While new private players quickly grab market share by leveraging their banking alliances (like HDFC Life with HDFC Bank and SBI Life with SBI), LIC has struggled to adapt. It still relies heavily on agents with limited access to wealthier customers, resulting in low conversion and earnings potential.
Zomato IPO:
In July 2021, Zomato, a food delivery and restaurant aggregator, launched its IPO. The stock debuted with a price band of Rs.72-76. Although there was high demand from investors, the stock dropped sharply after listing, causing losses for many. Currently, it trades at Rs.56 on BSE. Zomato has faced several challenges, particularly intense competition from Swiggy and new players like Uber Eats and Amazon.
Looking at recent case studies of IPOs in India can teach you important lessons. By understanding why these businesses struggled, you can better navigate challenges and make smarter decisions based on effective cost management, strong corporate governance, careful financial planning, ethical practices, adaptability to market changes, and building solid partnerships.
These insights can help you reduce risks and promote sustainable growth. By learning from others’ mistakes and knowing the basics like ‘What is IPO?’ clearly, you can create a strong foundation for long-term success in the ever-changing Indian IPO landscape.