Should You Apply for IPOs for Listing Gains or Long-Term Wealth?

You know that buzz when a new IPO comes for subscription?
Everyone’s talking. Some friends are applying for quick profits, others say, “Hey, this one’s for the long haul.”

But here’s the real question: Should you apply for IPOs just for that sweet listing gain, or is it smarter to think long-term?
Let’s dive in.

First things first: What’s an IPO, anyway?

In case you’re new to the game — an IPO (Initial Public Offering) is when a company offers its shares to the public for the first time.
It’s like the company’s big debut party… and you get a chance to buy a piece of it.

For investors, IPOs can be pretty exciting. New opportunities. Fresh stories. And sometimes — fat profits.

Why people chase listing gains (and why it’s tempting)

Okay, let’s be honest.
Who doesn’t love fast money?

Listing gains happen when the stock price on the first day jumps higher than the price you bought it for during the IPO.
Simple math: Buy at ₹100, it lists at ₹150 — boom, 50% profit.

Now some real numbers:
Here’s some food for thought, in 2023, out of 60 mainboard IPOs:

80% gave positive listing gains.
Average listing day gain? A juicy 26.3%.
As of December 2023, their average overall gain was even better — around 45%!

Crazy, right?
No wonder listing gains are so popular.

Take Vibhor Steel Tubes for example:
In 2024, it smashed it out of the park with a whopping 181.46% listing gain.
It’s one of the highest in India’s IPO history.

But here’s the catch…

Not every IPO is a party.

Sometimes, stocks tank after listing. Sometimes, the “buzz” fades, and prices settle lower than the IPO price.

More importantly — not every listing pop means the company will keep growing.

Which brings us to the other side of the story…

IPOs for Long-Term Wealth: The Bigger Picture

If you’re thinking about real wealth — the kind you build over years, not overnight — you’ve got to ask:

Are IPOs good for the long term?

Here’s some hard truth:
According to a 10-year study:

The median annual return of IPOs was 5.9%.
Meanwhile, Nifty 50 gave 12.8%.
And Nifty 500? Even better at 14.8%.

In simple words:
On average, IPOs underperformed compared to just sticking your money into index funds.

What does this mean for investors?

If you were banking on every IPO making you rich, you might want to rethink. Long-term success isn’t guaranteed just because it’s “new and shiny.”

So… why do some IPOs work better than others?

Good question. Let’s break it down:

Company Fundamentals Matter

If the company has a strong business model, growing revenues, profits — you’re looking at a solid long-term bet.
But if it’s just hype with no real earnings, then beware.

Timing (and Luck!)

Markets go through moods — bull runs, bear phases. IPOs launched during a booming market often see great listing gains.
In a down market? Not so much.

Sector Matters Too

Tech IPOs are flashy but volatile.
Consumer goods, financial services? More boring — but usually more stable over the years.

Where’s the IPO Money Going?

If the company is raising funds for growth (like expansion, new plants, R&D) — it is a good sign.
If it’s just giving early investors an exit. Tread carefully.

Here’s some real-life examples you’ll recognize

Zomato

Super hyped IPO.
Great listing day gains.
But post-IPO? Lots of ups and downs.
Struggled to turn profitable, stock fluctuated wildly.

LIC

Big daddy of IPOs in India.
Listed in 2022.
Modest listing gains.
But stock performance has been a mixed bag — affected by market corrections and sector challenges.

Lesson?
Listing day excitement doesn’t guarantee long-term success.

Quick Checklist Before You Apply for Any IPO

Before you click that “Apply Now” button, ask yourself:

Am I chasing quick money or planning for the next 5-10 years?
Do I understand what the company actually does?
Why are they raising money? Growth or early exit?
Is the IPO priced reasonably? (Overvalued IPOs = risky business.)
Am I okay if I don’t get allotment? (High-demand IPOs = lottery system.)

So, if you’re looking at quick gains — sure, play the listing pop.
But if you’re thinking “Hey, I want to invest like Warren Buffet” — pick companies you believe in for the long haul.