NDTV Profit, Sharma said a “beautiful little game” is being played on small investors using tricks like “anchoring bias.” He said big anchor investors and famous pre-IPO names are used to create hype and support prices that are not really fair or reasonable.
Moreover, Sharma also said that big investors’ names are used before IPO to create hype. In India, this works because there is a lot of dumb money,” he added.
Sharma said the IPO market works in two steps. First, a company sells its shares at a very high price. Then, after listing, the stock price crashes, sometimes by 50%, 60%, or even 80%. He pointed to companies like CarTrade, Nykaa, Zomato, and Paytm as examples. As per the sources.
Furthermore, Sharma said the main problem comes after the stock crashes. Investors still think the stock is cheap just because it fell 80%, instead of checking if the company is really worth its new price. “No one asks if it’s still worth ₹25,000 crore; everyone just compares it to the IPO price,” he explained.
As per the source, Business analyst Jayant Mundhra criticized Lenskart’s $7 billion IPO in an open letter. He accused Bansal of avoiding questions about the company’s value, exaggerating overseas assets, and ignoring lawsuits from franchisees.
He has also branded the IPO a ‘mockery’ of public trust. Mundhra alleged that Lenskart’s management has deflected by emphasising “creating value for customers” over discussing the IPO price, a stance he characterises as dismissive of public market scrutiny.
As per the NDTV Profit, Vishnu Agarwal, founder of Stock Knocks, said, “That warning, about pricing an IPO fairly, is the ghost haunting the Lenskart IPO. On one side, a ‘Shark Tank’ promoter known for grilling founders on valuation. On the other hand, an IPO priced at an eye-watering 236x P/E, where the promoter himself bought a stake at an 8x lower valuation just two months ago.
Read Also: Lenskart IPO sees strong start, Founder Peyush Bansal to gain ₹824 Crore from the IPO
Circumstances and reasons behind the IPO indian market’s volatility!
Is the IPO in the Indian market really dumb? Let’s deep dive into the IPO market.
Basically, it’s all about the demand and supply, as we have seen and experienced, there are various popular companies that have decided for IPO, as a result, they were listed with a discount or less premium, even though the company has good reputation and satisfactory financial background.
In sharp contrast, myriad renowned companies provided beyond expectations, listing gains to the investors, such as LG Electronics, which is listed with a 50% gain.
So we from IPO Watch think every investor should have their own research regarding the company and should have their own perspective on the IPO.
If the investors are thinking about a short-term investment in an IPO, normally, IPO GMP is their key point for profit; however, long-term contribution should always have strong financial research, market value, demand, peer group comparison, and other factors. Afterwards, it could be profitable for investors to apply to any IPO.
