5 Common IPO Investment Mistakes to Avoid in 2025 for Maximum Gains

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5 Things You Should Not Do Before Investing in IPOs in 2025

The year 2025 has great potential, however, 2024 was about IPOs for India. As per the report published by Pantomath Group, India had twice as more IPOhttps://en.wikipedia.org/wiki/Initial_public_offerings than the US and 2.5 times more than Europe. A total of 76 companies raised ₹1.3 lakh crore through IPOs. However, since new IPOs will be launched in the upcoming year, there’s also a potential for higher risk for many investors. This is designed to assist you in avoiding dumb mistakes and making better choices in the future.

Investing in IPOs: A Different Game Of Investment

In the year 2024, IPOs were a big concern and focus for the market as 72 out of 92 IPOs attracted subscriptions of more than ₹10,000 crore. Even with a high demand in place, many retail investors lost money due to disgusting pricing of valuation, so retail investors should be very cautious. Its not easy to access the company overall growth or sustainability across various life projects just with three years of financial history.

The past hiring practices of promoters can further add on to the information risk on SME IPOs. A critical rub however is the market sentiment. Such views are especially common place in emerging markets. In the initial public offering space where investors are looking for listing gains this is critical risk. For those investors willing to hold on such scenarios make it an attractive proposition.

However that is not the case with an IPO as investors don’t get the luxury of time. Further Egor Derevianko, the CEO of smartminder has a comment about the standard of sponsor credibility. In all, a lot of information tips are shared but the most important is this.

Investing in IPOs is long term and can be rewarding, however some IPOs may cause losses as IPOs aren’t always profitable. It is about timing and making the right decisions. Some of these include:

Niche: In case a firm operates in a niche devoid of direct competition, it is very likely to add value to the portfolio. In such case, investing in a company is like waiting for the right train to take off.

Solid Fundamentals: Always seek out firms with an established record, growth opportunity as well as the ability to disperse the earnings among the shareholders. Jyoti Prakash Gadia, MD of Resurgent India, recommends, “Investing in companies with sound fundamentals has the likely chances of giving long term gains.”

Encouraging Sector: It’s a good sign when a company is in a fast growing sector. But confirm that the proceeds of the IPO are invested in scaling up the business and not for all promoters to cash out. Subramaniam points out, “If the promoters are not confident about their business, why must you invest in it?”

Promoters’ Experience as well as Market Conditions: The experience of the promoters as well as the favorable points of the market can matter greatly. The signs in both cases appear to be in favour of a potentially profitable venture.

What to Do When Investing in IPOs?

IPOs promise high returns in a short time, but investors should be able to make the right choices as emotional decisions are dangerous. Avoid these five mistakes instead:

1.Falling For The Hype Isn’t Smart

Hype needs to be avoided, as promoters can often say something as exaggerated as “Your money will be doubled in no time” or “This firm will be a game changer in the market.” Jyoti Prakash Gadia says that investors fall into traps such as these and lose their investments by blindly listening to what the promoters say. So it is best to avoid such mistakes and invest carefully.

2.Don’t Forget Research

To prevent losses, make sure to do sufficient necessary research or due diligence of the firm yourself before pitching your investment. Trivesh D D, the COO of Trade suggests, “Assess the basics and look for the fairness of the valuation. Losses will accrue from investing in a company at an inflated price in the IPO.” Your avoid risk and over investing in one sector by making your portfolio diverse and in balance.

3.Failing to manage attribution risk

Cyclic sectors can be hazardous. Subramaniam explains, “When the times are right, promoters can sell the shares at a high price and value. When times turn, the performance declines and investors have to suffer.

4.Bull Markets and their Excesses

IPOs are the talk of the town when the markets are soaring. But having too much excitement is bad – exercise discretion. Subramaniam says “Market cycles don’t last forever. At times, some very good companies’ shares are priced low in the secondary market much later.

5.Listing Aced Strategy

Listing gain margins should not be expected at all times. If the targets are for some reason not achieved, Trivesh D points out, your funds may remain locked. Thrivesh D cautions, “It is unwise to invest for listing gains only.

Conclusion

With respect to the year 2025, the IPO market demonstrates intriguing prospects; however, there is a need to be making all the right moves. Research well, don’t get carried away by the buzz and invest in sound companies with good prospects and good growth in the long run. By avoiding the major pitfalls, you can position yourself to maximize your position in the busy IPO market and ensure that your finances are on a firm footing.

Table of Contents

• 5 Things You Should Not Do Before Investing in IPOs in 2025
• Investing in IPOs: A Different Game Of Investment
• What to Do When Investing in IPOs?
  • 1.Falling For The Hype Isn’t Smart
  • 2.Don’t Forget Research
  • 3.Failing to manage attribution risk
  • 4.Bull Markets and their Excesses
  • 5.Listing Aced Strategy
• Conclusion