IPO Boom In India: Record Applications, But Are Retail Investors Making The Right Calls?

On Wednesday, Jio Platforms listed at a 21 per cent premium after drawing close to 1.3 crore applications, the most any public issue has received anywhere in the world. India’s IPO market has never had more participants. The fundraising via mainboards amounted to above Rs 1 lakh crore for the third consecutive year as per PRIME Database in 2026, and there are now more than 23 crore demat accounts compared to 5 crore demat accounts back in 2020.

But a capital market is not measured by how many people apply. It is measured by how well they decide. On that test, the evidence says participation has run well ahead of discipline.

The gap between applying and investing

SEBI’s September 2024 study of 144 mainboard IPOs remains the clearest mirror we have. About 54 per cent of allotted shares by value were sold within a week of listing. Retail investors sold 42.7 per cent in that week, and individual investors had sold 70 per cent within a year.

How they sold is more telling than how much. When an IPO gained over 20 per cent in its first week, individuals sold 67.6 per cent of their shares. When it listed at a loss, they sold just 23.3 per cent. Mutual funds, by contrast, sold about 3.3 per cent of their allotment in the first week. The retail pattern is the disposition effect in its purest form: book the gain fast, sit on the loss and hope.

That is not investing. It is a lottery ticket with a settlement cycle, and it pays only for as long as listings keep popping.

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The listings have stopped popping

FY26 is where the two stories collided. Grant Thornton Bharat’s review found average oversubscription fell to 39 times from 71 times in FY25, and average listing-day gains fell to 7 per cent from 29 per cent. PRIME Database found that only 31 per cent of FY26 IPOs delivered listing gains above 10 per cent, against 71 per cent the year before.

The aftermarket is worse. Of 103 mainboard IPOs from 2025, 66 were below their offer price by mid-March 2026, per PRIME Database, with a median loss of 17.7 per cent. Of 112 FY26 mainboard issues, 52 were below issue price by April-end. Among the 151 SME IPOs launched in 2026, close to 46 per cent were under water by early October.

An investor who entered in 2024 expecting a 29 per cent pop and held through 2026 has lived a very different experience from the one the subscription numbers promised.

Two signals that mislead

The first is oversubscription. Jio’s issue was subscribed 22 times overall, but institutions bid 70 times their quota while retail bid 2.7 times. The NSE IPO in September showed the same split: 12.7 times from institutions, 1.3 times from retail. Meanwhile, several issues a fraction of that size were subscribed over 100 times in the retail category during the same month, per exchange data. Retail demand is concentrating in the smallest floats, where allotment odds are worst and the exit on a bad day is thinnest.

The second is the grey market premium. It is an unofficial price for expectations, not for the business. Investors who apply on GMP alone are buying sentiment and calling it analysis.

Where the money is going

Jio’s Rs 30,213 crore issue was entirely fresh, with Rs 27,500 crore earmarked to repay subsidiary debt. That is the exception this year. Uniqus data shows Rs 65,856 crore of the Rs 1,09,186 crore raised in 2026 was offer for sale, existing holders selling down rather than companies raising growth capital. An OFS is legitimate. But when sponsors sell near a cycle high, the buyer should at least know who is on the other side of the trade and why they are leaving.

Four questions before applying

Ask what the company does and how it makes money, from its cash flows rather than its pitch deck. How does its valuation stack up against listed companies? Adjusting for growth, margins and debt. What percentage of the financing is new capital? How will the funds raised be used? And ask whether you would hold the stock for three to five years if it listed below issue price. If the answer to the last one is no, you are trading, not investing, and SEBI’s numbers show the trader’s edge disappears the moment listings turn.

The IPO boom has done something valuable. It has made crores of households part-owners of Indian businesses. Whether it produces better investors depends on what those households do when a listing disappoints, and the FY26 record suggests most have not yet been tested. In a market where more than half of recent listings trade below issue price, protecting capital begins before the application, not after the allotment.

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(The author is Founder and Managing Director of Findoc Group)

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