Summary of "WTF is wrong with Indian IPOs"

Summary

The video critically analyzes the recent hype and valuation concerns surrounding Indian IPOs, focusing primarily on Lenskart (Lenskart Solutions Limited), while also referencing other notable IPOs such as Boat, Zomato, Paytm, Nykaa (NKAA), and Groww.

Key Companies, Tickers, and Sectors Mentioned

Lenskart (Lenskart Solutions Limited) – eyewear retail
Boat – tech/gadget sector
Zomato – food delivery (IPO in 2021)
Paytm – fintech (IPO in 2021)
Nykaa (NKAA) – beauty and cosmetics retail (IPO in 2021)
Groww – digital investment platform (recent IPO)
Mutual funds & pension funds: DSP Mutual Fund, SBI Mutual Fund, HDFC Mutual Fund, Axis Mutual Fund
Anchor investors include Singapore Government funds, Goldman Sachs, JP Morgan

Macroeconomic and Market Context

The Indian IPO market is experiencing significant hype, especially around tech and consumer startups.
IPO valuations are often vastly inflated compared to fundamentals.
Retail investors face risks due to aggressive pricing and founder/early investor exits.
Anchor investors’ participation signals demand but may create unrealistic expectations.

Lenskart IPO Specifics

Valuation jump: From ₹8,700 crore a few months prior to IPO to ₹70,000 crore at IPO (~700% increase).
Price-to-Earnings (PE) ratio: Around 235, compared to typical Indian companies’ 25-40.
IPO price band: ₹380 to ₹400 per share.
Founder pre-IPO share purchase: Piyush Bansal bought shares at ~₹50; IPO price ₹400, earning approximately ₹820-1000 crore within weeks.
IPO proceeds: Lenskart to raise ₹7,000 crore, but only ₹2,000 crore is fresh capital for operations; the rest goes to existing investors/founders as exit money.
Anchor investors bought 45% of shares offered in IPO, including global funds and major mutual funds.
Oversubscription: IPO was subscribed 28 times, with shares sold out in 5 hours, surpassing Zomato’s IPO subscription speed.
Questions raised about fairness, transparency, and sustainability of such high valuations given limited fundamental growth.

Broader IPO Market Observations

Early investors often exit during IPOs, which is legal but raises concerns about retail investors “holding the bag.”
Examples of IPOs with mixed outcomes:
- Paytm: Large IPO (~₹18,300 crore), mostly exits for early investors; stock fell 30% post-IPO.
- Nykaa: IPO price ~₹1000, doubled initially but declined later due to slowing growth and competition.
- Zomato: IPO price ₹76, opened at ₹115, but faced challenges due to losses and competition; recovered later due to quick commerce profitability.
- Groww: Profitable company with strong FY revenue (~₹4000 crore) and PAT (~₹1800 crore), IPO priced at ₹100, listed at ₹130+, showing strong fundamentals compared to loss-making startups.

Investing and Risk Management Framework Shared

The video outlines three key considerations for investors:

Investment horizon: Longer-term investors (10+ years) can take more risk; short-term investors should be cautious about overvalued IPOs.
Valuation understanding: Buying at high valuations means betting on future growth; patience and skepticism are advised.
Avoid hype-driven decisions: Oversubscription and anchor investor participation do not guarantee profitability.

Emphasis is placed on focusing on companies with solid business plans, profitability, and growth potential rather than speculative or hype-driven stocks.

Key Numbers and Metrics

Metric Value Lenskart valuation (IPO) ₹70,000 crore Lenskart valuation (months prior) ₹8,700 crore Lenskart PE ratio 235 IPO price band ₹380 - ₹400 per share Founder pre-IPO purchase price ~₹50 IPO proceeds ₹7,000 crore (₹2,000 crore fresh capital) Zomato IPO price ₹76 Zomato IPO opening price ₹115 Nykaa IPO price ~₹1000 Groww FY revenue ₹4000 crore Groww PAT ₹1800 crore Paytm IPO size ₹18,300 crore Paytm amount to early investors ₹10,000 crore

Recommendations and Cautions

Retail investors should be wary of IPOs with inflated valuations and significant founder/early investor exits.
Not all IPOs are scams, but transparency, valuation, and business fundamentals must be carefully analyzed.
Anchor investor participation is a signal but not a guarantee of success.
Investors should avoid herd mentality and hype.
The video disclaims that it is not financial advice and encourages viewers to make their own informed decisions.

Presenters and Sources

The video is presented by an unnamed YouTuber/commentator.
Quotes and opinions from:
- Piyush Bansal (Lenskart founder)
- Anurag Pagadia (Bloomberg)
- Runny Screwvala (Entrepreneur)
- Shankar Sharma (Investor)
- Santosh Rao (Investor)
- DSP Mutual Fund representative
- Other market participants and anchor investors

Conclusion

Overall, the video provides a critical view of Indian IPO valuations, especially highlighting the Lenskart IPO as an example of overvaluation, founder gains at the expense of retail investors, and the need for investors to be cautious and informed.