Why retail investors should tread the IPO market with extra caution

Chasing quick gains in IPOs can backfire if investors don’t do their due diligence to understand business risks

- Jash Kriplani

It's a galore of initial public offers, or IPOs, on Indian equity markets. The 90 IPOs so far in 2025 have cumulatively raised ₹1.51 trillion (up to 13 November 2025) marginally behind the ₹1.59 trillion vacuumed up by issuers in all of 2024, according to IPO tracker Prime Database.

More recently, Lenskart's IPO was in the news for its IPO at ₹70,000 crore-valuation, which was roughly ten times sales and 230 times its FY25 earnings.

Unfazed by such high valuations, retail investors lapped up the shares of the eyewear retailer, with the retail book getting subscribed 7.56 times. The appetite of retail investors for IPOs has remained strong, with the average subscription of retail book being about 24.28 times in 2025.

Such an appetite doesn't, however, take away from the fact that IPO investing comes with its own set of risks. An issuer's valuations, for instance, may not align with how the market prices it after listing. Nearly two-fifths of IPOs between 2021 and 2025, for instance, are trading at below issue price, data from Prime Database shows.

Key risks may remain unclear as the firm’s disclosure cycle has only just begun.

Thus, retail investors need to tread the IPO market with utmost care. Here is how you can use the company’s disclosures to take a more calculated risk when betting on an IPO.

What to look for