IPO Boom 2.0: Should You Ride the New-Age Wave or Wait for the Dust to Settle?

IPO Boom Is Back — But This Time, It’s Smarter

If the IPO frenzy of 2021–2022 felt like a high-speed rollercoaster ride, then H2 2025 is gearing up to be its sequel — but with better seatbelts.

India is witnessing the beginning of IPO Boom 2.0, and this time, it’s being led by a new generation of companies:

• AI-first platforms with real revenue traction

• Electric vehicle innovators attracting global capital

• Fintech disruptors with expanding user bases and embedded finance models

Over 35 high-profile startups are prepping their draft red herring prospectuses (DRHPs), while others are quietly building up to public listing within the next 12 months. The energy in the private capital ecosystem is electric — but retail investors are cautious. And rightly so.

Because while the last IPO wave created overnight riches for some, it also left many portfolios burnt, thanks to overvaluation, hype-driven pricing, and lack of profitability.

So how should today’s investors evaluate IPO opportunities?Should you look at IPO-focused mutual funds or PMS products?What are the new SEBI reforms doing to bring transparency and stability?And how can you decode an IPO before it hits the street?

Let’s walk through the new IPO landscape — and build a smarter, stronger investment approach for it.

What’s Fuelling IPO Boom 2.0?

Unlike the 2021 IPO frenzy, where many companies were valuation-chasing without profits, the 2025 pipeline is more disciplined. Here's why this wave is structurally different:

1. Stronger Foundational Metrics

Most startups heading to IPOs in 2025 are:

• Profitable or near breakeven

• Backed by institutional private equity or sovereign wealth funds

• Have visible revenue growth and unit economics

This isn't just storytelling — it’s execution-driven optimism.

2. Sector Tailwinds: AI, EVs, and Fintech

• AI & SaaS Platforms: With GenAI capabilities, real business clients, and deep IP, several AI startups are now market-ready.

• EV & CleanTech: EV infrastructure, battery management startups, and green logistics are gaining investor attention.

• Fintech 3.0: Unlike early UPI-focused wallets, these firms offer embedded finance, API banking, and B2B fintech solutions.

This thematic wave is expected to drive more sustainable public listing stories — not just momentary market highs.

3. Regulatory Maturity: SEBI’s New Rules in Action

Learning from the 2021–22 cycle, SEBI has tightened the leash:

• Minimum holding period for anchor investors

• Increased pre-disclosure of financials

• Improved allocation norms for retail and institutional investors

• Restrictions on promoters offloading huge stakes at listing

These changes are reducing the 'pump-and-dump' narrative that plagued earlier IPO seasons.

Evaluating IPO-Based Investment Approaches

As an investor, you now have multiple ways to gain exposure to IPOs. But each comes with pros and cons. Let’s break it down:

1. Direct Retail Investment in IPOs: Tempting but Tricky

Retail investors often flock to IPOs for listing gains. But here’s what you need to remember:

Pros:

• Allotment at fixed price

• Potential for listing-day pop

• Can be applied through demat with ease

Cons:

• High oversubscription means lower chances of allotment

• Valuation metrics are hard to evaluate

• Post-listing volatility is unpredictable

When it works: You’re betting on market sentiment and momentumWhen it fails: Overhyped IPOs fall 30–50% within months

2. IPO-Based Mutual Funds: Spreading Risk Over Multiple IPOs

These funds are either thematic or sector-based, with dedicated exposure to upcoming or recently-listed IPOs.

Pros:

• Diversified exposure to multiple IPOs

• Managed by professionals with research access

• Dynamic entry and exit from new listings

Cons:

• NAV may lag the market during bullish IPO runs

• Performance depends on fund manager’s timing

Best For: Long-term investors seeking broad exposure to new-age companies without taking listing-day risks

3. PMS with Pre-IPO Allocation Strategies

Certain Portfolio Management Services (PMS) offer access to pre-IPO or late-stage private companies through sophisticated networks.

Pros:

• Early entry before valuation pop

• Exposure to unicorns before they hit public markets

Cons:

• High minimum investment (₹25L+)

• Lock-in periods

• Liquidity risk and regulatory sensitivity

Ideal For: HNIs looking for alpha generation through differentiated access

Case Study: Learning from the 2021–22 Cycle

Remember the IPO class of 2021?

• Nykka surged post-listing but corrected 60% over the next 18 months.

• Zomato had a dream debut, followed by months of correction due to profitability concerns.

• Paytm became a cautionary tale — the stock tanked 70% from IPO price due to valuation mismatch and unclear path to profits.

What worked?

• Long-term investors who stayed in fundamentally strong businesses with scalable moats.

What didn’t?

• Listing pop chasers, those who ignored cash flow visibility, and funds overexposed to loss-making tech.

The lesson is clear:Valuation without validation is speculation.

How to Evaluate IPOs the Right Way

Before subscribing or investing in any IPO — directly or via funds — you must do the homework.

Here’s what a sound evaluation checklist looks like:

1. Assess IPO Valuations vs Peers

Look beyond media hype. Instead:

• Compare the price-to-earnings (P/E) ratio with industry leaders

• Study price-to-sales (P/S) for tech firms with negative PAT

• Understand how much of the IPO proceeds go to growth vs exit for existing investors

Example: If a startup has revenue of ₹500 crore but seeks a ₹20,000 crore valuation, that’s a 40x P/S — ask why.

2. Evaluate the Business Moat

Is the company:

• Creating a new category?

• Solving a pain point with high customer retention?

• Dependent on subsidies or cyclical demand?

Also, dig into:

• Revenue concentration risk

• Margins and cash burn

• Management pedigree and governance

3. Understand Lock-In Periods and Exit Pressures

• Are VCs and promoters selling a big chunk in the IPO?

• What’s the lock-in timeline for anchor investors?

• How much skin do founders have post-listing?

If everyone’s trying to exit — you shouldn’t be entering.

4. Post-Listing Volatility: How SEBI Is Addressing It

SEBI has introduced reforms that directly benefit retail investors:

• Longer anchor lock-ins to prevent early dumping

• Detailed disclosure of business models, especially for new-age tech

• Improved price band regulations to reduce extreme swings

This means the IPOs of 2025–26 will likely be more stable and investor-friendly, especially for long-term participants.

Your 5-Step IPO Investment Framework

Now that we’ve covered the landscape, it’s time to put it into a simple and repeatable action plan:

1. Define Your Approach

• Looking for listing gains? Focus on IPOs with strong anchor backing and realistic pricing.

• Long-term exposure? Consider IPO-focused mutual funds or flexi-cap funds that add new listings.

2. Avoid Herd Mentality

• Don’t apply for IPOs just because they're trending.

• Read the DRHP, understand the model, compare with peers.

3. Monitor New-Age Sector Trends

• EV supply chains, AI tools with enterprise clients, B2B fintech platforms — these are long-run themes, not hype cycles.

• Identify funds that are aligned with these sectors.

4. Use SIPs in IPO-Focused Funds

• NAVs may rise post-listings — SIPs help average costs and smoothen volatility.

• Don’t time every IPO — invest consistently over the cycle.

5. Reassess post-listing

• Not all IPOs will continue to perform.

• Track earnings growth and business performance post-listing to decide on holding or exiting.

IPO investing is not about speed. It’s about strategy.

Closing Thought: Chase the Story, Not the Noise

IPO Boom 2.0 is an exciting chapter in India’s capital market journey. But excitement must be balanced with analysis.

Whether you participate via direct allotments, mutual funds, or pre-IPO strategies — your approach should reflect clarity, not emotion.

So as the new wave of tech IPOs rolls in, remember:

Ride the trend, but read the term sheet.

Enjoy the upside, but examine the unit economics.

Follow the market, but trust your method.