IPO Market: There is a significant change in the stock market. Retail investors in the market are now getting selective about IPOs. This is the first time since 2022 that the average retail participation in the IPO has declined in any one year. Market experts believe that retail investors are now not only affected by the Gray Market Premium (GMP), but are paying more attention to aspects like valuation, company fundamental and promoters quality.
In fact, recently the IPOs of Schloss Bangalore (Leela Hotel) and AEGIS VOPAK Terminals saw 83 percent and 77 percent underwrite in the retail segment respectively. Interestingly, the retail segment was about 4.3 times in the IPO of Belarize Industries, which was closed a few days before the opening of both these IPOs.
Fall in retail applications for IPO
The prime database data shows that the number of retail applications has decreased after January 2025. On an average, more than 32 lakh retail applications were received for the IPO launched in January, but the number in the subsequent IPOs decreased to less than two lakhs. The enthusiasm regarding IPO seems to be decreasing among retail investors, which is confirmed by watching some recent IPO applications. The decrease in retail subscription shows changes in investor’s spirit.
It was a dull year for 2022 IPOs. In the year 2021, where companies raised ₹ 1.18 lakh crore funds from their IPOs, in 2022 the figure was about half. However, ₹ 1.60 lakh crore was collected through IPO in 2024.
Basis of Selection: Valuation and Fundamental
Some money managers say that now investors are paying more attention to aspects like valuation, company fundamentals and promoters quality in the decision to invest in IPOs. According to the Prime Database, the average number of retail applications in IPO in 2025 (till 24 May) was around 16.7 lakhs, which is less than 18.9 lakhs in the previous year. Last time the figure fell in 2022, when the average number of retail applications in the IPO was reduced from 14.45 lakhs to 5.66 lakhs.
Investors thinking beyond GMP
Rakesh Chaudhary, managing director of Keenot Capital, said, “Earlier retail investors used to decide on IPO based on gray market premium, but now retail investors have become quite selective. Now investors of the new era do homework before deciding to invest. No one now likes fancy valuation. IPO issuers should keep in mind that investors are quite aware of the valuation.
Demand for IPO is reduced
Market experts believe that IPO bunning may also be a factor of decrease in demand. It is important for merchant bankers, promoters as well as investors, as a large number of IPOs are likely to be ready for launch in the coming months. According to the Prime database, around 140 companies are in queue with new IPOs of more than ₹ 2 lakh crore. Raghav Gupta, joint CEO of IIFL Capital, said, “When many IPOs come rapidly, it can ideally reduce demand.
Mutual funds can make retail investors
Raghav Gupta further said that mutual funds are sitting on a multi-year high-level cash status. They have the ability to absorb IPO flow. ‘ Gupta said, ‘I firmly believe that different business models, strong fundamental principles and proper evaluated issuers are still likely to get healthy interest. For overwelling, especially for startups and deficit companies, growing concern is a matter of concern. However, a strong macro background, flexible retail flow, and regional diversification may reduce some risks. ‘
