Introduction:
Bro, we all have been there na…
An IPO comes, everyone’s talking, WhatsApp groups are full of “apply kar kya?” messages, and excitement is crazy high… but when the stock lists? Boom! Stock crashes!
If you’re seriously learning with solid share market classes in deccan, you’d know IPO investing is not just luck ya… It’s serious business.
Let’s talk real — why so many hyped IPOs flop badly despite all that “record oversubscription” drama.
What is an IPO, Really?
In simple words, an Initial Public Offering (IPO) is when a private company offers its shares to the public for the first time to raise money.
They use that money to expand the business, pay debts, or cash out early investors.
Why IPOs Create So Much Hype?
- Fear of missing out (FOMO)
- Big brand names are associated
- Brokers and media promotions
- Retailers dream of making quick 50%-100% listing gains
- Social media influencers are hyping stocks without knowing the fundamentals
Common Reasons Why IPOs Fail
- Overvaluation
Companies are asking crazy prices not match their fundamentals.
- Weak Financials
Many loss-making startups jump into IPOs during bull runs.
- Poor Market Sentiment
If global or Indian markets crash near listing time, even good IPOs struggle.
- Promoter Greed
Sometimes promoters offload huge stakes — means they don’t believe in long-term growth themselves!
- Unrealistic Growth Projections
“100% YoY growth expected” types of promises which are impossible practically.
Famous Failed IPOs in India
| Company Name | Year | IPO Issue Price | Listing Price | |
| Paytm | 2021 | ₹2150 | ₹1950 | |
| Reliance Power | 2008 | ₹450 | ₹430 | |
| Zomato (initially) | 2021 | ₹76 | ₹120 (good) |
Many big names taught investors expensive lessons, yaar.
What Retail Investors Usually Miss
- Financial health (profits, debt, cash flows)
- Actual competitive advantage (ya it’s not enough to say “first mover advantage”)
- Business risks clearly mentioned in the RHP (Red Herring Prospectus)
- Promoters’ past track record
Retailers just see the grey market premium (GMP) and jump without deeper thinking.
Red Flags to Watch Before Applying for an IPO
- Huge promoter selling
- The company has never made profits
- Business model is too new or untested
- No clear moat (competitive advantage)
- Extremely high P/E ratio compared to sector average
- SEBI’s Role in IPO Regulations
- SEBI makes it mandatory to file RHP with full disclosures.
However, SEBI doesn’t “approve” an IPO’s quality — only clears that minimum rules are followed.
You have to do your own homework.
How to Analyze an IPO Before Investing
- Read the RHP summary carefully.
- Check debt levels, cash flow, revenue growth.
- Compare valuation with listed peers.
- Analyze promoter background and management quality.
- Avoid emotional investing based on hype.
Real Indian Example: Paytm IPO Fiasco
- Huge IPO size (₹18,300 Cr) with no profits
- Highly loss-making with no immediate profitability plan
- Overvalued compared to global and Indian fintech players
- Result? After listing… it crashed badly and eroded investors’ wealth massively.
Lesson: Big brand ,≠ Big returns.
Final Thoughts
IPOs are like movie trailers — they look amazing… but the real movie (business performance) matters more.
Don’t fall for temporary hype, boss!
Proper research and guidance (like at share market classes in hadapsar) can really save your hard-earned money.
Not every IPO is a jackpot. Better to skip 10 bad IPOs and catch 1 good one, than burn your hands in every one!
FAQs
Q1: Why do IPOs fail after listing?
Mostly because of overvaluation, weak fundamentals, or bad market conditions.
Q2: How can retail investors analyze an IPO?
By reading the RHP, checking financials, industry competition, and management credibility.
Q3: Should I apply for all IPOs?
No! Only apply after careful analysis. If in doubt, better to skip.
Q4: Are all IPOs risky?
Every investment has risk. IPOs are riskier if done blindly without research.