IPO returns decoded: Premier Energies, Tata Tech among winners; what do experts say about listing gains vs issue price?

The performance of several recently listed companies highlights the difference between listing-day gains and returns from the IPO price, with some stocks continuing to deliver positive returns for investors despite sharp corrections from their debut levels.

Kotak Institutional Equities, in a recent report, said that performance across the primary and secondary markets over the past six months indicated strong investor enthusiasm for small-cap companies. The brokerage said it hoped these companies would deliver on the high expectations embedded in their valuations and that the narratives supporting the enthusiasm for small- and mid-cap stocks (SMIDs) would play out differently from previous cycles.

Kotak also noted that many companies that delivered strong listing gains subsequently generated poor returns. However, looking only at the fall from listing-day prices can give an incomplete picture of how IPO investors have fared.

Mohit Gulati, Managing Partner at ITI Alternatives, said listing-day gains largely reflect speculative demand and supply dynamics rather than a company's intrinsic value. He argued that the IPO issue price is a more relevant benchmark for assessing returns for investors who subscribed to the public issue.

The data show that all 10 stocks are trading below their listing prices, but their performance relative to their IPO issue prices varies significantly. Some continue to trade well above the issue price, while others have slipped below it.

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Premier Energies has delivered the strongest return among the 10 stocks, rising 105.6% from its issue price of ₹450 to ₹925. Its current price is only 6.7% below its listing price of ₹991, suggesting it has retained most of its debut valuation.

Tempsens Instruments has gained 96.13% from its issue price of ₹300 and is down just 6.8% from its listing price of ₹631. Sigachi Industries has advanced 76.75% from its issue price of ₹16, despite falling 51.2% from its listing price of ₹58.

Mamata Machinery has risen 62% from its issue price, while Tata Technologies has gained 49% from its IPO price of ₹500. Latent View Analytics, Bajaj Housing Finance and BLS E-Services have also remained above their respective issue prices, with gains of 23.4%, 21% and 13.1%, respectively.

These figures support Gulati's argument that a correction from the listing price does not automatically mean an IPO investor has suffered a loss. The outcome depends on the price at which the investor entered.

“Tata Technologies is still in the money from the issue price, though it is down from the listing day. That’s not the right way to look at this,” Gulati said, adding that almost every company in the group, apart from tw, was trading above its issue price. He said that was “actually not too bad in these markets”.

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Not all companies have retained their IPO gains. Vibhor Steel Tubes is down 30.8% from its issue price of ₹151, while Unicommerce eSolutions has declined 21% from its issue price of ₹108.

Both stocks have also fallen sharply from their listing prices, underlining the risk of paying elevated prices after a strong debut or buying into a company whose market valuation subsequently corrects.

The distinction is important: listing-day performance captures the immediate response to an IPO, while returns from the issue price show how the investment has performed for an investor who received shares in the public offer and continued to hold them.

Listing gains alone do not reflect an IPO’s long-term performance. A strong debut signals demand but does not guarantee sustained returns. Investors should assess earnings growth, cash flows, valuations and business fundamentals before making investment decisions.

Kotak Institutional Equities' broader caution about elevated enthusiasm for smaller companies remains relevant: businesses must ultimately justify investor expectations through their performance. For IPO investors, the issue price is an important starting point for measuring returns, but fundamentals remain central to assessing whether a stock is worth holding.

Dhanya Nagasundaram works as a Content Producer at LiveMint, specializing in news related to financial markets, stocks, and business. With over eight years of experience in journalism and content creation, she has honed her skills in data-driven reporting and market analysis. Her focus is on monitoring stock trends, initial public offerings (IPOs), corporate news, policy shifts, and larger economic trends that affect investors and market players. <br><br> At LiveMint, Dhanya consistently writes and produces articles that make complex financial topics accessible to readers. She keeps a close eye on equity markets, commodities, and macroeconomic indicators, assisting audiences in comprehending how global and domestic events influence investment perspectives. Her stories frequently underscore emerging trends within sectors, the IPO market, company earnings results, and market strategies pertinent to both retail and institutional investors. <br><br> Before her tenure at LiveMint, Dhanya accumulated a wealth of professional experience at various companies, including MintGenie, Informist, Cogenics, Chary Publications, KPMG, and the Royal Bank of Scotland. These positions allowed her to establish a solid foundation in financial research, reporting, and content creation. <br><br> Throughout her career, she has explored numerous subjects such as trading strategies, commodities, IPOs, wealth generation, corporate profits, and macroeconomic indicators. Her background in both financial journalism and corporate settings has given her the ability to tackle stories with analytical rigor while ensuring clarity for her audience. Through her contributions, Dhanya strives to deliver insightful, trustworthy, and investor-centric financial content.

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