IPOs once represented opportunities to buy into promising businesses at attractive prices. Today, that dynamic has flipped. Most IPOs are priced to perfection—leaving little to no upside for investors once they hit the market.
When you invest, your goal is to earn returns over time. But if those returns are already captured by insiders and private investors before the company even lists, there’s nothing left on the table. Buying into an overpriced IPO is like buying a flat at peak market rates—you’ll likely see no appreciation for years.
Why Is This Happening?
In the 1990s and early 2000s, companies like Infosys, Reliance, and HDFC created massive wealth for early shareholders. Their IPOs were fairly priced, leaving room for value creation as the businesses grew.
But those days are gone. Now, prices are fully discovered in private rounds long before a company reaches the public market. Venture capital and private equity investors capture most of the growth phase, and by the time retail investors are allowed in, the valuations are already stretched.
The New Market Reality
The IPO market today thrives on hype, marketing, and scarcity. Retail investors, driven by influencer promotions and social media buzz, rush to subscribe—creating the illusion of demand.
This demand ensures every IPO is oversubscribed, regardless of quality or valuation. Take Anthem Biosciences for example—raising ₹3,400 crore at nearly 70× earnings. That’s an outrageous multiple even for established, cash-rich companies, yet it still drew massive retail participation.
It’s a symptom of a market where awareness is low, and participation is high—exactly the wrong mix. As a result, IPOs today are often structured more for selling shareholders than for new investors.
The Bottom Line
IPOs used to be opportunities for wealth creation. Now, they’re often exit events for earlier investors. By the time a company lists, it’s already been through several funding rounds, each marking up the valuation.
Unless you deeply understand the business and its fair value, investing in IPOs is less investing—and more speculation. Long-term wealth is usually built by buying undervalued businesses, not overhyped ones.
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