IPOs delivered 21% average listing gains, but did investors actually make money?

India's IPO market has delivered attractive listing-day returns in recent years, but investors who held on to newly listed stocks have not necessarily enjoyed similar gains. According to Axis Capital's August 2026 IPO Market Update, 407 mainboard initial public offerings (IPOs) and follow-on offers listed between July 2020 and July 2026 recorded average listing gains of 21%.

However, subsequent performance varied considerably, with a meaningful proportion of these stocks trading below their issue prices, raising questions about whether listing-day enthusiasm translates into sustainable wealth creation.

Hemant Sood, Founder and Managing Director of Findoc Group, said investors must distinguish between short-term market demand and the underlying strength of a business.

"Listing gains and long-term returns measure two very different things. A strong debut reflects demand for an issue; it does not necessarily indicate that the underlying business can create sustainable shareholder value," Sood said.

Jio Platforms: A recent example

The recent listing of Jio Platforms illustrates how market valuations can influence investor expectations.

Jio Platforms made its market debut following an IPO priced at ₹1,119 per share. On November 3, 2026, the stock was trading at ₹1,437.40, representing a gain of approximately 28.5% over its issue price.

For an investor allotted 12 shares at ₹1,119 each, the initial investment of ₹13,428 would be worth ₹17,248.80 at that price.

Investment: 12 × ₹1,119 = ₹13,428

Market value: 12 × ₹1,437.40 = ₹17,248.80

Unrealised gain: ₹3,820.80, or approximately 28.5%, excluding transaction costs and taxes.

However, such gains do not guarantee similar returns over the next three to five years.

Jio's valuation also provides a benchmark for Bharti Airtel's India wireless business and Reliance Industries' digital assets. Analysts expect Jio's market leadership and limited free float to support its valuation, although future performance will depend on earnings growth, tariff increases and cash generation.

What should IPO investors examine?

According to Sood, five factors deserve attention before investing in an IPO.

First, investors should examine how the company intends to use the money raised. Fresh capital may fund expansion, debt repayment or working capital, while proceeds from an offer for sale go to existing shareholders.

Second, reported profits must be supported by operating cash flows.

"Revenue growth and reported profits must be supported by operating cash flows," Sood said, advising investors to compare profit after tax with cash generated from operations over several years.

Third, investors should assess the company's business model, customer concentration, pricing power and ability to sustain margins.

Fourth, valuations should be compared with listed peers using price-to-earnings and EV/EBITDA ratios.

Finally, corporate governance, promoter dilution, related-party transactions and shareholder lock-in expiries require scrutiny.

Listing gains versus long-term wealth

The key question is whether a company can consistently grow earnings after listing.

Sood emphasised that IPOs should be evaluated like other investments, with additional caution given their limited public-market track records.

While listing gains offer opportunities for quick profits, sustainable earnings, sound governance and reasonable valuations remain essential for long-term wealth creation.

For retail investors, a strong debut should be the beginning of financial evaluation, not the end.