How to win the IPO game: Beyond the buzz

Summary: IPOs today are less about raising growth capital and more about letting early investors exit, leaving retail investors holding risks that private markets were meant to absorb. The wiser strategy is patience: wait for hype to fade, results to arrive and valuations to normalise. Once the market filters out froth, a handful of newly listed companies with strong fundamentals may finally deserve attention. Over 2024 and 2025, nearly 60 per cent of IPO proceeds came through the OFS (offer for sale) route. Compare this to 2007, when fresh issues accounted for nearly 94 per cent of IPO proceeds. Back then, listing meant raising growth capital. But today, capital-raising has become capital-exiting. And this is only half the problem. Running alongside this shift is a more dangerous change in who bears risk. Traditionally, public markets were meant for companies that had already survived the messiest phase of their lives. Venture capitalists (VCs) took the early bets, absorbed losses, experimented with business models and endured years of uncertainty. Only when cash flows stabilised and the business proved it could stand on its own, did companies arrive at the stock market. That order has reversed today. In the last few years, a growing number of companies have gone public while still carrying risks meant to be tested in private markets – uncertain unit economics, experimental revenue models, choppy growth and business plans built on hope rather than cash flows. They list early, price boldly and imply decades of seamless execution. These risks that private capital is supposed to shoulder get passed on to retail investors, who pay top dollar for venture-capital-style risks. All this without board seats and without privileged access to information that the latter gets. Everyday, investors get only a glossy prospectus and the promise that ‘losses will narrow soon’. This information asymmetry is at the heart of why patience, not participation, is the wiser strategy when dealing with IPOs. Why patience tilts the odds in your favour At the time of an IPO, insiders know far more than the market ever can. Investors, meanwhile, buy narratives – future plans, rosy forecasts and assumptions – often at prices that already take into account years of flawless execution. But the market’s own record makes the case for patience. Looking at IPOs since 2016, median returns are weak immediately after listing and improve only with time. One month after listing, the median return is a negative 1.9 per cent. After six months, it inches up to 1.6 per cent. Only after a full year does it reach 3.1 per cent. These are not windfall gains. But the direction is unmistakable: time increases the odds of better outcomes. This happens as listing-day enthusiasm wears off faster than businesses can prove themselves. Early price declines are common as inflated expectations collide with limited information. Investors buy stories first and receive facts later. In the initial months, business models remain untested in public view and valuations reflect only promise. Only with time does that imbalance correct. Quarterly results begin to answer the questions that matter – whether growth holds, whether costs stabilise and whether losses narrow. As uncertainty reduces, the market reassesses and recovery begins. The improvement in returns comes after this scrutiny, not before it. In short, waiting is not missing the opportunity but letting the market do its filtering first. The case studies that follow show exactly how that process plays out. Zomato: Punished first, rewarded later Zomato debuted to roaring enthusiasm. The stock doubled, then crashed by more than 70 per cent once investors questioned its path to profitability. But as results improved – revenues rose, costs tightened, losses narrowed – the market reassessed. By FY24, Zomato had turned profitable at the operating level. Today, the stock trades near Rs 300 over its IPO price of Rs 76. This reflects a core truth of public markets: they can be brutal in the beginning, but rewarding once fundamental performance becomes visible. Paytm: Harsh reset followed by quiet recovery Paytm too collapsed after listing, dragged down by unclear unit economics, losses and regulatory uncertainty. It lost more than 70 per cent of its value. But over two years, it reworked its model, cutting cash burn, strengthening collections, focusing on subscription-led merchant revenue and shifting lending to safer NBFC-backed segments. As fundamentals improved, the stock recovered nearly four-fold from its lows. Ola Electric: When the hype runs out Ola’s stock doubled quickly post listing. But beneath the euphoria was a business struggling with inconsistent sales, widening losses and a weakening market share. As quarterly results accumulated, those cracks became impossible to ignore. From April to November 2025, its share in the two-wheeler EV industry’s sales slipped to 15 per cent, down sharply from 30 per cent in FY25. The stock has since fallen by over 70 per cent from its highs. This proves IPO enthusiasm inflates prices; time tests businesses. Those who bought Ola at the listing paid for promise, while those who waited avoided the damage. The right time to invest This brings us to the crux of this story: the best time to buy a newly listed company is rarely the time of the IPO. As Benjamin Graham said, “Some of these issues may prove excellent buys, a few years later, when nobody wants them and they can be had at a small fraction of their true worth.” He might have been describing India’s IPO cycle. Our methodology: Hunting for IPOs that managed to deliver over time Knowing when to invest is only half the job. The harder and more i

This article was originally published on January 01, 2026.