Key Takeaways
- Recent IPOs like Lenskart and LIC have shown weak stock market debuts despite high grey-market premiums
- Grey-market premiums (GMP) are becoming unreliable predictors of actual listing performance
- Investors are shifting focus from hype to fundamentals like revenue growth and profitability
India’s IPO market is witnessing a significant transformation as high-profile listings like Lenskart deliver disappointing debuts despite initial hype and strong grey-market premiums. This marks a departure from the 2021-22 frenzy when IPOs routinely delivered 50%+ listing gains.
LIC’s Reality Check
The state-owned insurance giant’s May 2022 listing served as an early warning. LIC shares opened at ₹867 on BSE – 8.6% below its ₹949 issue price – despite earlier GMP predictions of ₹85 premium. The disappointing debut signaled changing market dynamics.
Lenskart’s Cautionary Tale
Three years after LIC’s shocker, eyewear retailer Lenskart listed on November 10 with strong credentials: 28.3× subscription, FY25 revenue of ₹66.53 billion (up 23%), and peak GMP of ₹108. However, just before listing, GMP collapsed to ₹10. Shares opened at ₹395 on NSE – 1.75% below ₹402 issue price – and closed at ₹404.55, barely 0.6% up. Current share price hovers around ₹405, just 0.7% above issue price.
Changing Investor Mindset
The flat debut raises crucial questions about market maturity. Compared to the frenetic 2021-22 period, recent IPOs indicate more cautious investor behavior. Despite aggressive bidding during subscription, Lenskart’s grey market cooled significantly before listing, suggesting speculative FOMO is waning.
Exceptions That Prove the Rule
Not all IPOs disappoint. IREDA, the government-backed renewable energy financier, listed at 56.25% premium from its ₹32 issue price and has since gained 365%. This demonstrates that fundamentally strong companies in growth sectors still reward patient investors.
GMP’s Diminishing Relevance
Analysts had warned about Lenskart’s capital-intensive business model and modest return prospects. The failed GMP translation into real gains reinforces that grey-market premiums are poor indicators of long-term profitability.
Investors – both retail and institutional – are increasingly focusing on concrete metrics like revenue growth, cash flows, and profitability rather than market hype.
Market Evolution, Not Collapse
The Indian IPO market isn’t dead – it’s maturing. The era of get-rich-quick IPO plays driven purely by GMP and marketing hype appears to be fading. We’re entering a phase of greater market maturity with more discerning capital flows.
Companies will need to price IPOs more sensibly, while investors must exercise greater discipline. The Lenskart episode serves as a wake-up call, not a death knell for IPOs.
