The excitement around any Upcoming IPO often draws attention from retail investors eager to capitalize on potential listing gains. Many compare it to the performance of a Current IPO, hoping for similar or better returns. However, without setting realistic expectations, this enthusiasm can quickly lead to disappointment or poor investment decisions. Understanding what drives IPO performance can help investors stay grounded and make better choices.
1. Don’t Expect Guaranteed Listing Gains
A common misconception is that all IPOs open at a premium. While many IPOs do offer listing day gains, not all do—some even list below the issue price. Factors like oversubscription, grey market premium (GMP), sector sentiment, and market conditions at the time of listing all play a role in the final performance. Investors must realize that listing gains are not guaranteed and should not be the sole reason for investing.
2. Study the Fundamentals
Before investing in an IPO, especially an Upcoming IPO, it’s important to evaluate the company’s fundamentals. Does the company have strong financials? Is the business model sustainable? Are there credible promoters at the helm? A solid foundation increases the chances of long-term value, even if listing day performance is modest.
3. Consider Broader Market Sentiment
The state of the broader market has a strong influence on IPO success. During bullish phases, even average companies can witness strong listings due to high liquidity and optimism. In contrast, during bearish or volatile phases, even fundamentally sound IPOs may struggle. Comparing with a Current IPO launched under different conditions may not give an accurate benchmark.
4. Review the Price Band and Valuation
Overvaluation is a key reason IPOs underperform after listing. Setting expectations begins with understanding how the IPO is priced relative to listed peers. If the price band seems too aggressive without adequate justification, it’s a red flag for future performance.
5. Time Horizon Matters
Investors should be clear whether they are applying for listing gains or long-term wealth creation. Those looking at short-term profits must be ready for volatility and the possibility of loss. On the other hand, long-term investors can afford to wait out initial fluctuations and focus on the company’s growth trajectory.
6. Don’t Follow the Herd
Just because an IPO is popular doesn’t mean it’s a good investment. Hype can cloud judgment. Always do your own research—read the DRHP, follow expert analysis, and understand the business and financials before applying.
Conclusion
Every Upcoming IPO brings with it a mix of excitement and uncertainty. While it’s tempting to expect big gains based on a successful Current IPO, each listing is unique and influenced by multiple factors. By focusing on fundamentals, market context, and personal investment goals, investors can set realistic expectations and make smarter IPO decisions.
