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Abstract

Background: Research on Initial Public Offerings (IPOs) in emerging markets has largely centred on under-pricing and short-term returns, with limited attention to sustainability-oriented issuers. This study addresses that gap by examining the role of green innovation, defined as IPOs issued by firms with explicit environmental sustainability frameworks in shaping IPO outcomes in India.

Subject: The analysis covers 393 IPOs listed on the National Stock Exchange between 2012 and 2023, distinguishing Green and Non-Green issuers to assess comparative market performance under varying conditions and price bands.

Materials and Methods: The Normalized Raw Return Spread (NRRS) methodology and multiple regression analysis are employed to evaluate market-adjusted returns across listing day and twelve-month horizons. IPOs are categorized by issue price and market capitalization, with particular focus on small-cap offerings priced below ₹150.

Results: Green IPOs demonstrated moderate listing gains and higher short-term volatility but consistently outperformed non-green IPOs in long-term returns, especially beyond the sixth month. Small-cap green IPOs generated peak twelve-month returns of up to 147.74% in bullish market phases. However, regression analysis revealed that green status alone was not a statistically significant predictor of IPO performance after accounting for other factors; sustained post-listing momentum was the primary driver of returns.

Conclusion: By integrating sustainability and innovation metrics into IPO analysis, the study challenges the assumption that returns peak on listing day. The findings have both theoretical and policy implications, underscoring India’s evolving shift toward sustainability-driven capital markets and positioning Green IPOs as catalysts for long-term economic and environmental value.

Keywords

NSE; IPOs; Underpricing; Short-Run Performance; NRRS; Behavioural Finance; Market Efficiency

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