IPO frenzy: Why retail investors need to look beyond subscription, GMP buzz

August 27, 2026 / Kim Browne /


Disclaimer: This article is written by Arun Kejriwal, founder of Kejriwal Research and Investment Services. Views expressed are his own. Readers’ discretion is advised. There has been a deluge of IPOs on the main board over the last couple of months, and in such a situation, when retail investors don’t get allotment or make money, they have reason to feel hurt. SEBI had granted a six-month extension for IPOs whose validity period was expiring post the outbreak of hostilities in the Middle East to allow companies to complete the process without refiling. Coupled with the fact that post the same, markets were under tremendous pressure and did next to nothing. In such a scenario, IPO valuations cooled off, and even offer-for-sale components were reduced. 

  

What attracts retail investors to an IPO is primarily the buzz created around the issue on social media, grey markets, and the level of subscription. QIBs as a block apply on the last day between 11 am and 3 pm. What leads subscription numbers in the first two days are HNIs who take comfort from grey market premiums and retail investors who look to follow them and fancy allotment chances. While HNIs are pure fair-weather friends and would sell on day one of the issue listing and probably in the first hour, retail investors tend to stick on. They would only sell on very sharp gains or deep discounts. 

 

IPO is a tricky game if the level of subscription is a basis for application. A recently listed film entertainment company was subscribed over 100 times and debuted with a close to 10 per cent premium. By the end of the day, the listing gains had reduced to a mere 2.5 per cent. One could also talk about the high-profile SBI Funds Management, which had issued shares at Rs 574. It remained above the issue price for 11 trading sessions before falling below the issue price and continues to trade so. The grey market premiums averaged between ₹80-95 throughout the time the issue was open and before listing. Moral of the story: premiums are a marketing tool and indicative, but not a surety. 

 

What should an investor looking to apply in an IPO do? Interesting thought and reality. One cannot apply blindly nor do detailed research. At the least, read about the company. Understand what the company does. The margins that the company earns. Who are its competitors? While no two companies are identical, the competing landscape should be understood. Interesting data is provided on the basis of the offer price, which is published as the issue opening advertisement and available on the stock exchanges. Spare time to read the same and understand where you are investing. 

 

Investment in IPO never happens. The objective is normally listing gains. If that be the case, stick to it. If one believes that a company is good, investing should not be only by applying, hoping to get allotment and then remaining invested. It can also be done by buying into the share post-listing and holding on.  

Take ICICI Prudential AMC: good listing gains and even better returns for people who bought post-listing and are holding on. 

 

One last example: Bajaj Housing Finance. The share was issued at Rs 70, and it hit upper circuit for two consecutive days. On day three, after touching a high of ₹188, it began its downward journey to touch ₹72.60, almost close to its issue price. Don’t chase a share, and day three of listing is a crucial one in the history of any share. 

 

Invest in an IPO with clarity. 



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Kim Browne

As an editor at Cosmopolitan Canada, I specialize in exploring Lifestyle success stories. My passion lies in delivering impactful content that resonates with readers and sparks meaningful conversations.

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