Shocking IPO Reality: Just 36% of New-Age Stocks Outperform Market Over 5 Years

New-age IPOs promise moon shots—but most crash before takeoff.

The hype-to-reality ratio

For every startup darling that beats the market, nearly two others get left in the dust. The numbers don't lie: only 36% of these flashy listings actually deliver over a half-decade span.

VC math vs. investor returns

Private valuations keep climbing while public market performance... doesn't. Maybe those 'disruptive' business models work better in pitch decks than earnings reports.

A cynical footnote

But hey—at least the bankers got their fees. The rest of us get to play 'bagholder or tax write-off?' with our portfolios.

Strong listing gains fade for majority of companies

While 68 per cent of IPOs delivered average listing gains of 24.15 per cent, the momentum faded quickly, with just over a third showing long-term alpha for IPO investors.

Post-IPO investors emerged as the most disadvantaged, with only 32 per cent seeing positive returns.

Also read

Lessons from the 2007 IPO frenzy: After gain comes pain

Pre-IPO investors, although better positioned, still had mixed results — 43 per cent outperformed, while others faced steep losses.

Technology-enabled service companies with clear monetisation models, such as Zomato (Eternal) and Nazara, significantly outperformed capital-heavy businesses.

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The sizzle and fizzle of new age firms

The report highlighted that these companies, and B2B SaaS companies such as Awfis and Zaggle, demonstrated superior longer-term performance.

Paytm, Ola Electric fail to meet post-listing expectations

Meanwhile, high-profile IPOs such as Paytm and Ola Electric have failed to live up to the HYPE and have not delivered returns to their investors, due to factors ranging from overvalued IPOs to loss of market share to listed peers post-listing.

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Investors turn cautious as recent IPOs disappoint

PolicyBazaar and Ixigo have consistently generated alpha over the BSE 500 across different investor categories, supported by strong fundamentals. 

In addition, BSE’s listed shares generated an 84.73 per cent annual outperformance over NSE over the last four years.

Study says narrative, not numbers, drove IPO boom

According to Nitin Aggarwal, Director – Investment Research and Advisory at Client Associates, the startup IPO boom was driven more by narrative than numbers.

“Our analysis shows that while listing gains rewarded early risk-takers, sustained outperformance was reserved for companies built on solid fundamentals — not hype. Capital-efficient growth, profitability, and business discipline are what drive long-term value,” Aggarwal said.

Investors need to MOVE beyond FOMO and focus on backing resilient, scalable businesses, he added.

Profitability, cash FLOW generation, and capital efficiency are emerging as the key investor benchmarks, the report read.

Published on August 13, 2025