Speaking to NDTV Profit, Sharma said a “beautiful game” is being played with small investors by employing psychological tactics such as “entrenching prejudices”. He argued that IPO-bound companies backed by major investors build an artificial sense of legitimacy and price justification that collapses after the stock market collapse.
He added, “No one is asking whether at Rs 25,000 crore it is still worth it. Everything will be anchored in the IPO price.”
Lenskart Solutions recently received a huge response to its anchor book and reportedly received bids worth around Rs 68,000 crore from institutional backers on Thursday, with participation from nearly 70 major investors.
However, Sharma was unimpressed with the optics of such investor support, calling it a facade to attract private participation at inflated valuations.
“If you look at it rationally, the whole point is the use of anchor books, or the use of big investors before the IPO, the use of big names… you can get so much in India because there is so much dumb money,” he told NDTV Profit.
In his broader commentary, Sharma described a two-step process that, he said, defines India’s current IPO cycle.
First, the IPO is being launched at what he believes is an unjustifiably high valuation. Then, shortly after listing, the stock collapses on the secondary market. “Stocks will fall… 50%, 60%, 80% as we have seen,” he added, citing past ones like CarTrade, Nykaa, Zomato and Paytm.
Sharma emphasized that the core problem lies in what happens after the collapse in prices.
According to him, investors, locked into the original listing price, are interpreting the dip as a buying opportunity, rather than reassessing the company’s fundamental value at the new lower price. This flawed logic, he says, continues to ensnare more and more investors.
“So many billions of money are flowing in from private investors. As an investment banker you have to respond to that,” he noted during the interview with NDTV Profit.
Sharma called the entire construct “the way capitalism works” and did not shy away from the cynicism underlying his perspective. “It’s a beautiful game. I love it. That’s the way capitalism works. The millions and billions of small investors coming in. Somebody’s got to take money out of them, so these IPOs come and take money out of you,” he said.
The comments have come to light amid increasing scrutiny of IPO valuations in India, especially in the technology and consumer-facing sectors, where companies are often backed by top venture capitalists and private equity funds.
While anchor investments are typically seen as a sign of institutional confidence, Sharma’s comments highlight the other side of the story: the retail frenzy that follows and the repeated cycles of wealth erosion.
Also read: Clear vision! How Lenskart Founder Peyush Bansal Made Rs 1,500 Crore Profit In 3 Months Just Before IPO
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