Mega IPOs Turn Into Mega Disasters: Can HDB Financial Break the Rs 10,000 Crore Curse?
Analyzing the track record of large IPOs and HDB Financial's potential to buck the trend
Table of Contents
The IPO Size Curse Phenomenon
The Indian stock market has witnessed a peculiar pattern over the years – the larger the IPO, the higher the chances of disappointing performance post-listing. This phenomenon, often referred to as the "mega IPO curse," has left investors wary of big-ticket public offerings exceeding Rs 10,000 crore.
Recent market data shows that HDB Financial Services IPO is set to list after the ₹12,500 crore issue was subscribed over 17 times. However, investors remain cautious as past big-ticket IPOs like LIC, Paytm and Reliance Power delivered disappointing listing performances. This creates a compelling question: Can HDB Financial Services break this notorious jinx?
The Stark Reality
Market analysis reveals that approximately 70% of IPOs exceeding ₹10,000 crore have delivered negative returns on listing day. This statistic alone explains why the investment community approaches mega IPOs with extreme skepticism.
HDB Financial Services: The Latest Contender
HDB Financial Services is positioned to make its stock market debut on July 2, 2025, on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The company successfully completed its Rs 12,500 crore initial public offering, marking it as one of the largest IPOs in recent times.
IPO Structure & Valuation
- Price Band: Rs 700-740 per share with minimum application of 20 shares
- Fresh Issue: ₹2,500 crore for business expansion and growth initiatives
- Offer for Sale (OFS): ₹10,000 crore by parent company HDFC Bank
- Market Valuation: Over ₹61,000 crore at upper price band
- Subscription Window: June 25-27, 2025
The company's strategic positioning as a subsidiary of HDFC Bank provides it with several competitive advantages. As a leading non-banking financial company (NBFC), HDB Financial has established a strong presence in consumer finance, vehicle loans, personal loans, and business lending segments.
Business Strengths
- Strong parentage under HDFC Bank's umbrella
- Diversified loan portfolio across multiple segments
- Established distribution network and customer base
- Proven track record of profitability and growth
- Robust risk management practices inherited from parent company
For comprehensive details on HDB Financial's IPO allotment process, share allocation methodology, and investment analysis, investors can access our detailed coverage of the HDB Financial IPO allotment and listing prospects.
History of Mega IPO Disasters
The track record of large IPOs in India presents a cautionary tale for investors. Historical data reveals that mega IPOs have consistently underperformed market expectations, with many delivering significant losses on listing day. Let's examine the most prominent examples that have shaped investor skepticism toward large public offerings:
The Hall of Shame: Major IPO Disasters
These high-profile failures have collectively erased thousands of crores in investor wealth and established the infamous "mega IPO curse" in Indian markets.
The Paytm Catastrophe: A Case Study
Paytm's IPO remains the most spectacular failure among mega IPOs. The stock opened at ₹1,950, fell to ₹1,560 by day's end, and continued declining. Within months, it lost over 70% of its value, wiping out approximately ₹1.3 lakh crore in market capitalization. The company's overvaluation, weak business fundamentals, and poor market timing created a perfect storm for disaster.
Among these mega disasters, Coal India stands as a rare exception, delivering strong listing gains and long-term performance. However, this single success story is vastly overshadowed by multiple failures, reinforcing the pattern that larger IPOs face disproportionate challenges in meeting investor expectations.
Mega IPO Success Statistics
IPOs Above ₹10,000 Crore (2004-2024)
Positive Listing Returns:
25% Success Rate
Average Loss on Listing:
-18.2% Average Loss
Performance Comparison: Big vs Small IPOs
Statistical analysis reveals a concerning pattern. Poor Performers: Eight of the 30 IPOs have delivered negative returns, with Reliance Power being the most notable example. It was the largest IPO at the time, but its performance has disappointed many investors.
Mega IPO Success Rate
Out of the top 10 largest IPOs in India:
Only 20% delivered positive listing day returns
Long-term performance (3+ years):
Only 30% outperformed market indices
The data suggests that investors should approach large IPOs with extreme caution. The bigger the IPO, the higher the scrutiny, and often, the greater the disappointment.
Why Do Large IPOs Often Fail?
Several factors contribute to the poor performance of mega IPOs:
Overvaluation and Hype
Large IPOs often come with significant media attention and hype, leading to inflated valuations. Companies and their investment bankers may price these offerings aggressively, leaving little room for upside once the stock starts trading.
Institutional Selling Pressure
Big IPOs attract substantial institutional participation, but these same institutions may quickly book profits or cut losses, creating downward pressure on the stock price.
Market Timing Issues
Companies often time their large IPOs during market peaks when valuations are high but investor sentiment may be turning. This poor timing can result in lukewarm reception from the market.
The Curse in Numbers
- 67% of IPOs above ₹10,000 crore have delivered negative listing day returns
- Average listing day loss for mega IPOs: -15.2%
- Only 3 out of 12 mega IPOs have doubled investor money in 5 years
- Retail investor participation decreases as IPO size increases beyond ₹5,000 crore
HDB Financial's Chances of Success
Despite the historical curse, HDB Financial Services has several factors working in its favor:
Strong Parentage
Being backed by HDFC Bank, one of India's most respected financial institutions, provides credibility and operational support that many previous mega IPO failures lacked.
Robust Business Model
As an established NBFC with a diversified portfolio spanning vehicle loans, personal loans, and business loans, HDB Financial has demonstrated consistent profitability and growth.
Market Conditions
The current market environment for financial services companies appears more favorable compared to when some of the previous mega IPOs were launched.
Positive Indicators
- Strong oversubscription of 17 times indicates robust investor interest
- Established business with proven track record
- HDFC Bank's strong brand backing
- Reasonable valuation compared to peers in the NBFC space
However, investors should remain cautious. The company's large size and the historical performance of mega IPOs suggest that even positive factors may not be enough to overcome market dynamics.
Investment Strategy for Large IPOs
Given the track record of mega IPOs, investors should consider the following strategies:
Wait and Watch Approach
Rather than applying for the IPO, consider waiting for the stock to list and stabilize. Many mega IPOs have provided better entry opportunities post-listing.
Fundamental Analysis Over Hype
Focus on the company's fundamentals, business model, and long-term prospects rather than getting caught up in the IPO excitement.
Portfolio Allocation
If you do decide to invest, limit your exposure to a small percentage of your portfolio. The high risk associated with mega IPOs warrants careful position sizing.
Risk Management Tips
- Never invest more than 2-3% of your portfolio in any single IPO
- Set stop-loss levels before investing
- Have a clear exit strategy
- Consider the lock-in period for institutional investors
- Monitor promoter and institutional holding patterns
Final Verdict
The question of whether HDB Financial Services can break the Rs 10,000 crore curse remains to be answered. While the company has several positive attributes – strong parentage, established business model, and robust market position – history suggests that size itself can be a significant headwind.
The curse of mega IPOs is real and well-documented. Only a Few Winners: Among the top 30, only two IPOs from the top 10 have outperformed the broader market indices over the long term. This statistic alone should give investors pause.
For retail investors, the prudent approach might be to wait and watch. If HDB Financial Services can buck the trend and deliver positive returns, there will likely be opportunities to invest at reasonable valuations post-listing. If it follows the pattern of previous mega IPOs, investors who waited will have avoided significant losses.
Key Takeaway
While HDB Financial Services has strong fundamentals and backing, the historical performance of mega IPOs suggests extreme caution. The Rs 10,000 crore curse has claimed many victims, and breaking it will require exceptional execution and favorable market conditions.
Ultimately, successful investing requires learning from history while remaining open to exceptions. HDB Financial Services may indeed be that exception, but until proven otherwise, the mega IPO curse remains a formidable challenge for any large public offering in the Indian market.