Samvat 2082: A Word of Caution for Investors in the IPO Wave
As the Indian primary markets continue to buzz with new public offerings, market veteran Sunil Singhania has sounded a warning bell for investors. In a recent interview with NDTV Profit, Singhania expressed his concerns about the current IPO wave, stating that around 75% of the companies coming out with IPOs will trade below their issue price in the next six months.
Singhania, the founder of Abakkus Asset Manager LLP, emphasized the importance of caution when investing in IPOs. “One has to be very, very careful. My view is that around 75% of the companies coming out with IPOs will trade below their issue price in the next six months,” he said.
Why Investing in IPOs Can Be Risky
Singhania pointed out that valuation is a major deterring factor in the current wave of IPOs. He believes it is risky to invest considerable wealth in a company with high valuation just by looking at limited data and information. Singhania listed three reasons why investing in IPOs right now may not be a good idea:
- The pricing of IPOs leaves nothing on the table for retail investors.
- Not all IPO companies are great entrepreneurs, so one has to be careful about that.
- There is limited information, and investors depend on what the management presents to them in a short span, and then they have to take a call of investing large sums of money in those companies.
For more information on IPO investing, visit our website.
Merits of Investing in Strong IPOs
However, Singhania also believes that there are merits of investing in an IPO if the company is strong. He cited the recent example of LG Electronics, which listed at a premium of 50%. “There will also be a set of companies that are interesting — where there is merit — and for those, IPOs will be the only way you can look at investing because they are coming fresh,” he said.
Singhania’s comments are part of NDTV Profit’s broader Diwali coverage, where they speak to various money managers and market veterans about how and where to invest going into Samvat 2082. To learn more about Samvat 2082 investing, click here.
Navigating the Current IPO Wave
So, how can investors navigate the current IPO wave? Singhania’s advice is to be cautious and look at many factors carefully before investing in an issue. He also emphasized the importance of doing one’s own research and not relying solely on the information presented by the company’s management.
For tips on IPO research, visit our website. Additionally, investors can consider consulting with a financial advisor or conducting their own research before making any investment decisions.
Conclusion
In conclusion, while the current IPO wave may seem exciting, it’s essential for investors to exercise caution and do their own research before investing. By being aware of the potential risks and taking a careful approach, investors can make informed decisions and avoid potential losses. To stay up-to-date with the latest IPO news and trends, visit our website.
