-
IPO caution is crucial as many new listings are overpriced and risky.
-
IPO investment should be made only after studying company performance for a few quarters.
-
Historical lessons from Reliance Power and Infosys show that market frenzy doesn’t guarantee future success.
IPO Caution: Experts Advise Investors to Think Before Investing
The Indian stock market is currently witnessing a wave of new initial public offerings (IPOs), with several companies rushing to get listed. However, experts are urging investors to show IPO caution before joining the race. According to Nilesh Shah, MD & CEO of Envision Capital, and Devina Mehra, Founder and CMD of First Global, IPOs often look attractive but can be risky if investors don’t study the fundamentals carefully.
Both market veterans agree that many IPOs are overvalued when they come to the market. This means that even though the hype may look promising, investors could end up paying more than the actual worth of the company. Shah and Mehra both believe that careful research and patience are better than rushing into every new offer that hits the market.
IPO Investment: Not Always a Quick Profit Game
While IPOs are often seen as a quick way to make listing gains, IPO investment doesn’t always turn out to be profitable. Nilesh Shah highlighted that only a small percentage of IPOs actually deliver returns immediately after listing. “Broadly, over time, just 2–10 percent of IPOs make money at the time of listing or within the first month,” he told Business Today.
This means that while investors might be attracted by the buzz or social media discussions around a new issue, most IPOs fail to give instant profits. Shah also pointed out that investing after a company has shown its performance for two to four quarters can be safer. By then, the stock’s real potential and true valuation become more visible.
IPO Caution: Learning from the Past – Reliance Power and Infosys
History gives us many lessons in IPO caution. Devina Mehra recalled how Reliance Power Ltd (RPower) and Infosys became perfect examples of how demand and future performance don’t always match. Reliance Power’s IPO saw one of the biggest investor frenzies ever seen in India. However, soon after listing, its share price dropped sharply, disappointing thousands of investors who expected quick profits.
On the other hand, Infosys, one of India’s biggest technology companies today, had a completely different story. When Infosys came out with its IPO, it was actually undersubscribed. Hardly anyone was interested. But over time, Infosys became one of the most valuable and successful companies in India, proving that short-term demand does not define long-term success.
These two cases clearly show why investors should not base their decisions purely on hype or crowd behavior.
IPO Investment: Focus on Fundamentals, Not Frenzy
Devina Mehra warned that many investors treat IPO investment like a lottery — hoping to get lucky with allotment and quick listing gains. She said that this “lottery-like” mindset is dangerous. Instead of focusing on excitement or social media trends, investors should carefully look at the company’s business model, valuation, and management strength.
Mehra also pointed out that when there is a market frenzy, most IPOs are priced too high. In such situations, even if the company has a good business, the high valuation makes it difficult for investors to earn good returns in the short term. Often, the few reasonably priced IPOs are so oversubscribed that retail investors barely get any shares.
IPO Caution: Market Outlook and Expert Predictions
Despite these warnings, both experts remain positive about India’s long-term growth story. According to Nilesh Shah, the next one to two years could offer better opportunities for investors compared to the previous year. He believes that as the economy stabilizes and corporate earnings improve, stock performance will likely strengthen.
However, Devina Mehra expects that a meaningful rise in earnings might take longer — possibly until the third quarter (Q3) of FY26. She believes that patience will be key during this phase and that short-term expectations should be kept realistic. This further supports the idea of IPO caution, as jumping into overvalued listings during uncertain earnings cycles can lead to losses.
IPO Investment: Creating a Pipeline for Future Opportunities
Nilesh Shah also mentioned that IPOs have a different kind of benefit. Even if investors don’t immediately buy into them, they help create a pipeline of future opportunities. As newly listed companies mature, investors can study their performance, management behavior, and business sustainability over time.
This approach allows investors to make better-informed decisions later, when the market has adjusted the price to reflect the company’s actual worth. In other words, not investing in an IPO doesn’t mean missing out — it could mean waiting for a smarter entry point.
Conclusion: Balancing Excitement with Awareness
The stories of Reliance Power and Infosys remind us that not every popular IPO turns into a success story, and not every quiet launch fails. IPO caution and IPO investment both demand patience, research, and awareness.
As Nilesh Shah and Devina Mehra suggest, investors should avoid chasing every hot IPO and instead focus on companies with strong fundamentals and realistic valuations. The key lesson? Don’t let market excitement guide your decisions — let facts, patience, and long-term vision do that instead.
