- India's IPO market is booming, causing some companies to misprice offerings and raise caution
- The surge reflects India's capital markets maturing with strong retail and institutional investor interest
- About half of 333 Indian IPOs this year trade below offer price, showing uneven deal quality
A euphoria in India's primary markets is leading some companies to misprice their initial public offerings, prompting investor caution, according to Pramod Kumar, chief executive officer of Barclays Plc's India unit.
The country's IPO machine is breaking fundraising records, with the surge underscoring how India's capital markets have matured into a major fundraising hub, driven by a swelling base of retail investors and steady institutional appetite even as secondary equities lose steam.
“When you see such frenzy, there is always likelihood of some of the companies mispricing their IPOs and therefore their stocks not doing well,” Kumar told Bloomberg Television's Haslinda Amin. “As long as majority do well, the market will support,” he said. Investors should tread with ‘caution' and track the institutional participants coming in as anchor investors, and fundamentals of companies, Kumar said.
Concerns around stretched valuations have intensified in recent weeks, most notably with Lenskart Solutions Ltd., the eyewear retailer founded by “Shark Tank India” judge Peyush Bansal. The company priced at several hundred times earnings and faced a wave of social media criticism over its lofty valuation — prompting a local mutual fund to issue a rare public defense of its stake. The stock whipsawed on its debut, sliding as much as 12% before clawing back losses to end slightly higher.
About half of the 333 Indian firms that made their debut this year are trading below their offer price, according to data compiled by Bloomberg, highlighting the uneven deal quality in an increasingly crowded market. Larger offerings have fared slightly better.
Kumar said global funds are likely to return to Indian markets next year if the US economy slows, while domestic retail and institutional investors are expected to continue deploying capital in 2026. Corporate balance sheets in India remain healthy, while leverage is low, he added, factors that should support fundraising activity.
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