Small-cap IPOs outperform big listings in 2024, delivering massive returns

​In 2024, while billion-dollar IPOs like Swiggy, Hyundai, and Bajaj Housing Finance dominated the headlines, it was the smaller companies with market caps under Rs 6,000 crore that outperformed expectations. The year witnessed a remarkable shift where these lesser-known companies delivered exceptional returns, making up nearly 70% of the top 10 performing IPOs.

Smaller companies make a big impact

Among the standout performers were Jyoti CNC Automation, KRN Heat Exchanger, and Enviro Infra Engineers, all of which demonstrated incredible growth post-listing. Jyoti CNC Automation, a manufacturer of precision engineering solutions for industries like automotive and aerospace, emerged as the top performer with a staggering return of 302% from its IPO price.

Of the 10 multibagger IPOs, seven had a market capitalization of less than Rs 10,000 crore, highlighting a crucial trend—big ticket IPOs don’t always guarantee the best performance. The high hype surrounding larger IPOs often leads to overvaluation, which can hinder returns despite massive initial interest from investors.

The rise of small-cap stocks

Small-cap IPOs like KRN Heat Exchanger, Enviro Infra Engineers, and Platinum Industries have rewarded investors with returns upwards of 300%, proving that high-profile IPOs don’t always deliver the best results. These smaller companies tend to fly under the radar, but their solid fundamentals, niche market positions, and lower valuations allowed them to exceed investor expectations.

The danger of overvaluation in large IPOs

While large IPOs generate significant buzz through extensive marketing and roadshows, they can be prone to overvaluation. This results in inflated expectations and may lead to disappointing post-listing performances. Experts stress the importance of assessing a company’s fundamentals and growth potential beyond the hype, particularly for retail investors.

In 2025, more large IPOs are on the horizon, with companies like Tata Group, LG, and NSE planning their market debuts. It will be interesting to see whether they can meet the expectations set by smaller IPOs in 2024.