Expensively priced IPOs: Valuations must be justified by growth visibility

If the company has strong fundamentals but is valued expensively, invest for long term or reconsider after six months

At an event in Kolkata, Securities and Exchange Board of India’s Whole-time Member Kamlesh Chandra Varshney urged merchant bankers to adopt realistic pricing strategies for large initial public offerings (IPOs). 

Excessively high valuations, e said, often lead to post-listing slumps, eroding retail investors’ trust. 

Why IPOs are priced high 

In 2024, 337 companies went public, raising nearly ₹1.67 trillion. “When market sentiment is euphoric, promoters frequently view these windows as an opportunity to unlock maximum value. In such conditions, and if the sector has an exciting story, investors almost always pay a premium,” says Trivesh D, chief operating officer, Tradejini.