A man walks out of the Bombay Stock Exchange (BSE) building in Mumbai, India, February 28, 2020.
Credit: Reuters photo
Bengaluru: Due to strong capital inflows, many startups and tech-led firms hit the primary market between 2020 and 2025, but a majority of pre-IPO investments underperformed the broader market.
In a detailed whitepaper titled ‘The New-Age IPO Performance Analysis’, Client Associates (CA) has analysed 25 new-age companies that went public between May 2020 and June 2025 and revealed that only 36 per cent of IPO investors and 32 per cent of post-IPO investors generated positive alpha. These companies include Zomato, Nazara Tech, Yatra, Go Digit, IdeaForge, Nykaa and Mama Earth, among others.
The study states that while companies experienced listing gains driven by high oversubscription multiples, sustained long-term value creation remained elusive for most.
The proportion of companies generating positive alpha over the benchmark stands at 43 per cent (9 out of 21) for pre-IPO investors, 36 per cent (9 out of 25) for IPO investors, and 32 per cent (8 out of 25) for post-IPO investors as of June 16, 2025.
The findings point out technology-enabled service companies with clear monetisation models, such as Zomato and Nazara, significantly outperformed capital-heavy businesses that failed to establish a viable/sustain unit economics.
Interestingly, investors who exited at the six-month lock-in period have benefited from the listing gains. Companies with strong retail appeal, such as Nykaa and Zomato, generated exceptional short-term returns, while those with an unfocused business model experienced immediate market scepticism, according to the findings.
The data suggests that pre-IPO investors achieved optimal risk-adjusted returns by exiting during the lock-in expiry window rather than maintaining long-term positions.
Companies like Unicommerce and IdeaForge delivered exceptional listing gains exceeding 90%, driven by limited supply and high investor demand, the study said.
Nitin Aggarwal, Director Investment Research and Advisory at Client Associates, said, “India’s 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. As India’s capital markets mature, investors need to move beyond FOMO and focus on backing businesses that demonstrate resilience, scalability, and sound economics,” Aggarwal added.
In the whitepaper, Client Associates recommends that investors should prioritise selective exposure to listed new-age companies with strong fundamentals, participate tactically in IPOs for listing gains, avoid retail-driven FOMO in the unlisted market, and rely on professional fund managers for private market allocations.