List of 11 Biggest IPOs that Failed and Disappointed Investors

An IPO (Initial Public Offering) is a company’s coming out of the box moment, where a company goes public to raise money in exchange for shares that are a part of their company in the form of equity. If all goes well, the investors will scramble and rush to buy the stock, thus increasing the demand for their shares which will give them the rooftop listing prices. This is only the optimistic way of looking at this, of course; you can't predict the outcome of how your stock will perform during the opening.

But what if nobody shows up?, what if nobody buys your IPO? surely initial public offerings are a very good way of raising huge sums of initial capital but there are always downsides to it, like opening up to a wider public and dealing with market moods and cranky shareholders which are often not predictable.

When is an IPO considered a failure?

If the stock prices of the company do not meet the valuation at which the stock was listed, then the IPO is considered a failure.

There were several booms in IPOs in India, but not every IPO was able to reap the valuation that it desired. Let's know some of the biggest IPO failures.

List of Failed IPOs

1. Reliance Power
2. Paytm
3. Zomato
4. RateGain Travel Technologies
5. Cartrade Tech
6. Krsnaa Diagnostics
7. SjS Enterprises
8. Kalyan Jewellers India
9. Fino Payments Bank
10. Aditya Birla Sun Life AMC
11. Suryoday Small Finance Bank

Reliance Power

Listed in the year 2008, Reliance Power was also known as the dream IPO of Anil Ambani; this IPO ran very well on the hype wave and took the global market by storm. It was a hit even before reaching the market, and the speculations valued it at almost 190 billion dollars in the local market and also 100 billion dollars from foreign investors. It was one of the biggest IPOs to ever hit the market. But after all this, the IPO listing story was different. Only after a few days of listing did the price of Reliance Shares come crashing down, as if just the name of the company was not enough, nor the tag of Ambani. Very soon the dream run of Ambani's Reliance Power came to a standstill and fast forward to today, the stock price of Reliance Power is down 99% from the listing price. There is nothing more to say after this, there will never be a bigger failure in the history of the stock market.

Paytm

2021 was such a dream run for all the stocks as the markets were breaking records and touching sky-high levels several times. Also known as the golden year for IPOs, Paytm is also a fintech company that launched its IPO in 2021. The failure can also be blamed on the extreme optimism of the company which issued it at a very over-the-top valuation which was around Rs 18,300cr. But even though the opening of the stock was very weak, it was listed in 1955 against the issue price of Rs 2150. Soon the stock lost close to 75% of its value and is trading at around 600 per share. Some blamed the company’s financials for its performance and some blamed its bloated listing price, and some even blamed it for hitting the market too soon; all said and done, the IPO was one of the biggest failures in the history of financial markets

Zomato

Even though one of the leaders in its sector Zomato is still a loss-making company and this has directly affected its IPO and market value. Hitting the market in 2021, Zomato had a pretty good run and had pretty good listing gains. But all of this came crashing down when Zomato shares faced a reality check when it lost 47% of their value in a single month of June 2021, and it is currently trading below its listing price.

RateGain Travel Technologies

Although this stock cannot be totally described as a total failure, it didn’t do any wonders either. It was listed on the stock market in January 2022 and it had a wonderful run when the stock zoomed more than 25% in less than a month of its listing. But soon the sunny days of the stock were over and currently, it is trading around 11% below its issue price

Cartrade Tech

Issued in the year August 2021, CarTrade Tech was one of the biggest failures an IPO has ever faced in such a short period of time. Even though the CarTrade Tech IPO was subscribed 20.29 times & the public issue was subscribed 2.75 times in the retail category, the optimism did not last long. Even though the stock had its dream run for a couple of months, then corrected itself and lost almost 35% of its value in the next couple of months.

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Krsnaa Diagnostics

Launched in August 2021 Krsnaa Diagnostics is one of  India’s largest diagnostics providers.

Even with a lot of optimism lurking around after debuting at a 7% premium over the issue price, this dream run did not last very long, the stock price of the company quickly lost its value after the declaration of its increased loss in FY20. The stock is currently trading close to -30% of its value from its issue price.

SjS Enterprises

One of the leading players in the Indian decorative aesthetics industry, SjS enterprises was a unique niche to hit the market, but that certainly was not enough to impress the investors. Even the debut of the IPO was very weak as it opened 5% below its issuing price. After debuting in the market in November 2021 the fate of the company's stock did not change anytime soon and is still trading around 20% below its issue price, a part of the blame can be given to the low revenue growth of the company and low-income turnout too.

Kalyan Jewellers India

The IPO of this company was largely hit by the lockdown that was enforced throughout the country for the second time which forced Kalyan Jewelers to shut down all the stores in India, this made them lose 30% + of their revenue in a single quarter which disappointed the investors.

Issued on March 2021, it can be fairly said that Kalyan Jeweler's IPO was a failure largely due to their entry timing in the market and not due to any other aspect of their business.

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Fino Payments Bank

It was one of the latest issues in the line of IPOs hitting the market in October 2021 and it definitely was not a hit. Fino Payments Bank's IPO was launched in January this year and it has a PE ratio of 86.41 which did not impress the investors at all. The stock is down more than 30% year to date already.

Aditya Birla Sun Life AMC

Issued in September 2021 Aditya Birla Sun Life AMC had huge speculations and optimism attached to its IPO both by the investors and the company.

There were only  two objectives of the IPO

1. Achieve the benefit of raising capital from the large public market
2. Execute the sale of 38,880,000 shares at a good price by selling them to the shareholders

Even though the finances of the company were healthy, the company’s IPO was largely hit by the sentiment of the market which made the share prices fall more than 21% from their issue price.

Suryoday Small Finance Bank

Hitting the market in march 2021 when major big names in the market were shooting for IPOs proved out to be costly for this company, it seems having a good book value and good P/E ratio was not enough for Suryoday Small finance Bank and did not help in a better performance at the market. Zoom in to today the company has lost more than 55% of its value and is still on a bearish run just because of bad timing in the market.

FAQs

Which Top company's IPOs have failed?

Some of the biggest failed IPOs are:

• Reliance Power
• Paytm
• Zomato
• RateGain Travel Technologies
• Cartrade Tech
• Krsnaa Diagnostics
• SjS Enterprises
• Kalyan Jewellers India
• Fino Payments Bank
• Aditya Birla Sun Life AMC
• Suryoday Small Finance Bank

When is an IPO considered a failure?

When the stock prices of the company do not meet the valuation at which the stock was listed, then the IPO is considered a failure.

Why did Kalyan Jewellers IPO fail?

Analysts believe that the shares of Kalyan Jewellers IPO were overvalued compared to its profitability in the market.

Which is the best IPO?

As per performance, some of the best IPOs in 2022 are:

• Adani Wilmar Ltd.
• Ruchi Soya Industries Ltd.
• Campus Activewear Ltd.
• Hariom Pipe Industries Ltd.
• Veranda Learning Solutions Ltd.