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A Reality Check for Retail Investors
IPOs often feel like the ultimate jackpot moment; a company stepping into public life, retail investors lining up in excitement, and news anchors calling it a turning point. But not every listing turns into a success story.
In fact, some become cautionary tales of what happens when hype overpowers fundamentals. Since 2021, over 280 companies have gone public in India. Many did well. But a handful crashed so badly that investors lost more than half their capital.
This is not about hidden penny stocks. These are brands you’ve heard of, Paytm, Star Health, DreamFolks, Popular Vehicles. Some backed by marquee investors, some by strong demand. And yet, all of them are now trading at 50% to 97% below their IPO price.
*Data sourced from Business Standard
This blog dives into what went wrong with clear facts, zero fluff, and one aim: to separate hype from hard reality.
- The brutal fall of AGS Transact Technologies
Listed in early 2022 with a ₹680 crore IPO, AGS Transact positioned itself as India’s second-largest ATM and cash management services provider. It came to market with an issue price of ₹175 per share and a valuation based on 38× its FY21 earnings; a pricing level that typically signals high expectations despite modest profits. Even though that should have been a red flag in itself, the IPO was subscribed 7.8 times.
In simple terms: investors paid a premium price for a company that wasn’t growing fast or making strong profits and that mismatch eventually caught up with the stock.
But post-listing, the cracks began to show. The stock never found its feet. Revenues were stagnant, digital payments volumes were weak, and competition in cash services intensified. On top of that, it was a commoditised, low-margin business in a sector where future relevance is already under question.
Today, the stock trades at around ₹5.29; a 97% crash from its IPO price. That means ₹1 lakh invested in the IPO would now be worth less than ₹3,500. AGS Transact is possibly the worst-performing IPO on Indian markets in the last five years. And in hindsight, the warning signs were always there.
- Popular Vehicles & Services: A weak engine under a flashy hood
Kerala-based Popular Vehicles entered the public markets in March 2024 with a ₹602 crore IPO. As an authorised dealer for brands like Maruti Suzuki and Tata Motors, it had a decent track record and widespread presence. But investors were underwhelmed.
The IPO was barely subscribed; just 1.25x overall and post-listing, the stock struggled. While the luxury car segment showed a 40% YoY jump in Q1 FY26, overall revenue growth was just 1%. Passenger vehicle sales were down 7%, offset by modest growth in EVs and commercial vehicles.
More importantly, Popular Vehicles lacked a differentiated edge. Auto retail is low-margin and capital-intensive. Network expansion is costly, and inventory risks are real. Despite adding new EV and pre-owned showrooms, the stock remains down nearly 55% from its IPO price.
Strong branding and decent operations weren't enough to mask poor timing, a weak market narrative, and investor fatigue.
- Star Health: ₹825 crore loss in FY21, IPO subscribed just 79%
Backed by Rakesh Jhunjhunwala, Star Health’s IPO in December 2021 was supposed to be a landmark moment. It was India’s largest standalone health insurer, commanding a 16% market share at the time. And yet, the IPO limped through with just 79% overall subscription, barely scraping past regulatory thresholds thanks to institutional buyers.
The problem wasn’t demand, it was valuation. Shares were priced between ₹870 and ₹900, implying a price-to-book ratio of 14.15. In contrast, ICICI Lombard, a well-established insurer, was trading at just 8.25×. At that price, investors expected growth, profits, and stability. What they got was a ₹825 crore loss in FY21, rising claims during Covid, and low underwriting margins.
Moreover, over ₹4,400 crore of the IPO was an Offer for Sale, nearly 60% of the proceeds went to existing shareholders instead of funding business growth. Add to that increasing competition in the health insurance sector, and the picture gets worse.
In short, the IPO asked investors to pay top dollar for a company that was losing money, facing rising costs, and giving most of the money raised to early investors; not a great deal for newcomers.
Today, the stock continues to struggle with investor trust, profitability concerns, and pressure on margins.
- DreamFolks: Down 49% from IPO, model hit by direct partnerships
At the time of its IPO in August 2022, DreamFolks was a niche but growing brand. Known as India’s largest airport lounge access aggregator, it partnered with banks, card issuers, and travel companies to offer seamless lounge experiences to flyers. The IPO was priced at ₹326.
But the stock never lived up to its promise. By July 2025, it had fallen nearly 50% from its listing price, and over 68% from its 52-week high. Several things triggered the decline.
First, large institutional holders like Bajaj Finance and Motilal Oswal Mutual Fund dumped their stake in the open market. Second, Indian banks; including Axis and ICICI started bypassing DreamFolks altogether and directly tied up with lounge operators. The core aggregator model began to lose relevance.
Technically, the stock broke down sharply. RSI readings hit oversold levels, but with no clear support in sight, the sentiment turned decisively bearish. What once looked like a clever platform play now looks like a middleman business without defensibility.
- Fino Payments Bank: Down over 60%, no lending license, ₹577 IPO price
When Fino listed in late 2021, it came with a strong rural network, tie-ups with micro-ATMs, and an ambition to become the go-to digital bank for underserved India. But right after listing, reality set in.
The company was small in size, had limited deposit traction, and was struggling to turn profitable. Payments banks have operational limitations; they can’t lend, can’t issue credit cards, and face a constant uphill battle on monetisation.
Fino's revenue growth was underwhelming, and expenses stayed high. There was no clear path to scale or profitability, and that showed in the share price.
The IPO price of ₹577 now looks wildly optimistic for a business model with capped upside. Fino’s listing was a reminder that regulatory constraints can kill even the most innovative-looking financial models if monetisation isn’t solved.
- Paytm: India’s biggest IPO became its most sobering one
The ₹18,300 crore IPO of One 97 Communications in November 2021 was historic. It was India’s biggest IPO ever, backed by global funds, priced at ₹2,150 a share, and framed as a once-in-a-generation fintech bet.
But the red flags were glaring. Nearly ₹10,000 crore of the issue was an Offer for Sale. The company had posted losses of over ₹17,000 crore cumulatively and warned in its own prospectus that it wouldn’t be profitable for years.
Expenses were spiraling, especially on ESOPs and marketing. Valuation touched ₹1.5 lakh crore and yet, on Day 1, the stock listed below issue price and closed down 27%.
HNIs barely subscribed to the IPO, and retail demand was lukewarm. There were no listing-day gains, and no post-listing enthusiasm.
More importantly, Paytm had no clear moat. UPI competitors like PhonePe and Google Pay were offering the same services for free. Its payment bank had limited traction. Its credit and wealth verticals were unproven. Investors quickly realised that Paytm was trying to do too many things, with no standout profit engine.
The stock’s relentless fall erased over ₹70,000 crore of investor wealth in the first six months. And it reshaped how India approached tech IPOs afterward.
The real lesson for investors
Each of these six companies had a very different business. But the reasons for failure often overlap. Overvaluation. Weak post-IPO performance. Lack of profitability. Promoters cashing out. Hype without a moat.
Retail investors have to stop chasing listing day gains and start asking tougher questions. What is the real business model? Is there profit visibility? Who’s selling in the IPO and why?
IPOs are not lotteries. They are entry points into long-term business stories. And when the story doesn’t hold up, the price won’t either.
India’s IPO pipeline still looks strong. Companies like Meesho, Lenskart, Groww, and ICICI Prudential AMC are lining up to list. But after Paytm, Star Health, and AGS Transact, the bar is higher. Investors have become selective, and rightly so.
If the product is great but the valuation is unreasonable, stay away. If the company is losing money with no end in sight, stay away. If the hype feels louder than the numbers, stay away.
Because in the end, the biggest risk is not missing out, it’s holding on to a dream that never had a solid ground to begin with.
FAQs
Why do some Indian IPOs fail after listing?
Many IPOs fail because they are overvalued, lack a strong business model, or have promoters looking to cash out. If a company has no profitability path, weak fundamentals, or inflated expectations, the stock often crashes post listing.
What went wrong with the Paytm IPO?
Paytm’s IPO was overpriced, with over ₹10,000 crore going to existing investors. The company had no clear profit engine, mounting losses, and faced tough competition from UPI players. Retail investors quickly lost confidence.
Why is AGS Transact Technologies considered the worst Indian IPO?
AGS Transact lost 97% of its value from its IPO price. The company had weak financials, limited growth, and operated in a low-margin, outdated sector. Despite this, the IPO was priced aggressively, leading to investor losses.
How did Star Health’s IPO perform post listing?
Star Health’s IPO was poorly received, getting only 79% subscription. With a ₹825 crore loss and a high valuation, it failed to justify investor expectations. Most of the IPO proceeds were also an Offer for Sale.
Why did DreamFolks stock decline after its IPO?
DreamFolks’ stock dropped nearly 50% as banks started bypassing its aggregator model. With major institutions exiting and direct tie-ups gaining traction, its business moat eroded quickly.
What were the problems with Fino Payments Bank’s IPO?
Fino lacked a lending licence, struggled with profitability, and had limited growth prospects. Its ₹577 IPO price did not reflect its restricted business model, leading to a 60%+ drop in market value.
Is Popular Vehicles & Services a failed IPO?
Yes, the stock is down over 55% from its IPO price. Despite brand tie-ups, Popular Vehicles lacked differentiation. Auto retail is low-margin, and weak revenue growth further hurt investor sentiment.
What are the common signs of a risky IPO?
Red flags include high valuations, lack of profits, low subscription by retail investors, and a large Offer for Sale component. Weak sector outlook and unclear growth plans also signal risk.
Can retail investors avoid bad IPOs?
Yes. Retail investors should study the financials, check who’s selling in the IPO, and avoid companies with no profit visibility or inflated hype. Don’t chase listing gains blindly.
Which upcoming Indian IPOs should investors watch carefully?
Upcoming IPOs like Meesho, Groww, and Lenskart have strong brand recall but need careful analysis on valuation and profitability. Learnings from Paytm and AGS show that hype isn’t enough.
