Lenskart Valuation: Quant MF's Sandeep Tandon Says 'Stupidity' Is Driving India's IPO Frenzy

Amid growing chatter over the valuation of Lenskart and other fresh IPOs this year, Quant Mutual Fund's founder and CIO, Sandeep Tandon, has given a stark warning about the ongoing fervour over IPOs.

Tandon pointed out that 'stupidity' is driving Indian investors to pay unreal valuations for companies that international markets wouldn't otherwise approve.

“If US is not willing to pay these companies this sort of valuation, then why should I pay in India? Look at Korea, they would love to get listed in India as we seem to be more than willing to pay a premium. This is stupidity on our part that we are giving these companies such a high valuation," he told NDTV Profit.

Tandon's comments come in the midst of concerns over the valuation of the upcoming Lenskart IPO. He sees massive risks associated to investing in these fresh issues, reminding that "In the last one year, 60% of the newly listed stocks are trading below [their] IPO price."

Tandon argued that early investors and "even the best brains of the country" are simply cashing out, or getting "carried out," because the market dynamics are overwhelmingly positive for sellers.

"It’s a demand-supply situation. Demand is so skewed in their favour, they are tempted to exit," he said.

He criticised the market's willingness to overpay, indirectly mentioning the recent successful listing of Korea's LG Electronics in India.

"Look at Korea, they would love to get listed in India as we seem to be more than willing to pay a premium," he said.

What's bothering Tandon most, however, is the influx of inexperienced retail investors, who might not know how to handle market cycles and are getting caught in the 'hype'.

"My worry is that a lot of young people have come into markets who have not seen these cycles, and they are all very excited about it," he said. "This is how the human psyche works. These IPOs are very expensive, and there is no exit in these names."