A market veteran has sounded a stark warning about the quality of companies preparing to list on the stock market, saying eight out of 10 IPO candidates display weak business fundamentals and that many are likely to trade well below their issue price.
Vikas Khemani, founder and chief investment officer of Carnelian Asset Management and Advisors, said he reviewed the companies preparing to launch their initial public offering (IPOs) with several investment bankers and found little to excite investors.
“I sat down with a few bankers to see the IPO pipeline. We refused to meet 95% names. Balance 5% we will meet to understand,” he wrote on X, stressing that even those few did not offer a compelling combination of price and business strength.
“Nothing was screamingly interesting either on Price or on business,” he added.
Khemani's remarks make a distinction between companies with attractive business models and those suffering from frothy valuation expectations.
“If we liked business, didn't like the price expectations,” he said, signalling a mismatch between fundamentals and the prices vendors hope to obtain at listing.
Even more stark was Khemani's assessment of business quality across the board. “80% were poor business quality,” he wrote, and cautioned, “Many companies will not be even 50-60% of IPO price.”
He expects several new listings to fall substantially short of the valuations at which they float.
Despite the blunt verdict, Khemani added that his stance was not an indictment of the IPO mechanism. “Not to say all companies are bad. We love companies going public and evaluate most,” he wrote, highlighting that the firm remains interested in genuine opportunities.
Khemani closed with a direct appeal to the institutional investor community to lift standards “It's just a broader trend. Be ‘extra' careful. Appeal to my fellow institutional investors to raise the bar even higher,” he urged, calling for more rigorous due diligence and stricter entry criteria from those who coordinate and participate in public offerings.
I sat down with a few bankers to see IPO pipeline. We refused to meet 95% names. Balance 5% we will meet to understand. Nothing was screamingly interesting either on Price or on business. If we liked business, didn't like the price expectations. 80% were poor business quality.…
December 10, 2025 Khemani's post also triggered a wave of responses, with users questioning the current state of the IPO market and the role of institutional investors.
One user asked why institutional buyers remain active despite weak fundamentals, writing, “If most IPOs are coming at inflated valuations…why are fund houses still aggressively investing in them?”
AdvertisementVikas sir... Hope your voice is heard by all in the industry.
December 10, 2025
Sir, If most IPOs are coming at inflated valuations with subdued business quality, why are fund houses still aggressively investing in them?
Everyone is refering to anchor book... where is this trend going. Are they…Another reminded retail investors that “IPO is not a listing festival. It's an exit for someone else,” adding that raising standards “is the only way to protect long-term returns.”
This is exactly the problem with late stage bull markets.
December 10, 2025
When liquidity is high, quality control goes low.
Bankers push anything that can be sold. Promoters anchor to peak valuations.
And institutions are expected to support the market.
But capital has only one real job:
Go…Others criticised the motives behind recent offerings, with one user saying that many IPOs “aren't coming to raise capital and expand biz” but are instead “solely to give an exit to promoters and VCs.”
Unfortunately these IPOs aren't coming to raise capital and expand biz, they're done solely to give an exit to promoters and VCs!
December 10, 2025Another warned that “most of the new age portfolio managers are likely to burn investors' money,” predicting a final burst in the bull market before many investors retreat for good.
I see "most" of new age portfolio managers are likely to burn investors money and most investors won't return to markets in their lifetime, we will get that situation for sure, maybe in 2-3 years, meanwhile I also expect the last rally of this bull run next year.
December 10, 2025For investors, Khemani's message is a reminder that the decision to buy into an IPO should rest on scrutiny of business quality and sensible valuation, not on the rush to participate in the market.
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