IPO Maina: Is Valuation Going Out of Touch with Reality? Insights from Mr. Dhiraj Relli 

The IPO wave has turned into on͏e of the most talked-about trends͏ in market trends, and a large number of investors are rushing into it with high expectations. During a recent discussion with Moneycontrol, Mr. Dhiraj Relli, Managing Director and CEO, shared his perspective on the o͏n-going I͏PO excitement and the premium valuations many companies are commanding. He discussed various aspects, including opportunities, risks, and things that investors need to focus on before making any move. 

Private Investors Finally Getting an Exit 

Mr. Relli highlighted that the biggest advantage offered by the IPO boom is that it has given a chance to private equity participants and private investors to exit the market. He mentioned that this development has acted like a ‘silver lining’ amidst all the ‘noise.’ According to Mr. Relli, many early investors had been waiting for the right window, and an͏d th͏e current market enthusiasm has given them the perfect chance to exit. 

Domestic Institutions Discovering New Opportunities 

Mr. Relli said that the IPO rush has also benefited domestic institutions in selectively looking for newer opportunities. With heavy flows into mid-caps and small-caps, these institutions were running out of new ideas as to where to invest.  The influx of these IPOs has given institutions a chance to invest in some newer businesses that they might not have considered before. 

60% Only IPOs Gave Listing Returns 

Mr. Relli highlighted that as an investor, it should not be expected that every IPO will bring rewards on listing. He pointed out that only around 60% of IPOs have delivered listing gains, and post-listings, some of them have performed really well.  

However, he also mentioned that many stocks that listed well experienced sharp corrections afterwards. “Some stocks have fallen more than 50% after listing. So, investing in IPOs can be a double-edged sword,” he added.

Final Thoughts 

Mr. Relli concluded by saying investors need to stay careful and selective while looking at IPOs. According to him, investors are usually better off waiting for one or two quarterly results before taking a position. He felt this approach gives a clearer picture of how the company performs after listing and helps investors make a more informed decision.