Sandeep Tandon, founder and CIO of Quant Mutual Fund, has voiced strong criticism against the high valuations being assigned to Initial Public Offerings (IPOs) in India. His concerns particularly focus on the upcoming IPO of Lenskart, a popular eyewear retailer.

Overvaluation Concerns

Tandon questioned the rationale behind Indian investors paying valuations that wouldn't be acceptable in U.S. markets. He pointed out a worrying trend:

• 60% of newly listed stocks in the past year are trading below their IPO prices
• IPOs are described as 'very expensive' with limited exit options
• Inexperienced retail investors are entering the market without understanding market cycles

Factors Driving High Valuations

Tandon attributes the inflated valuations to favorable demand-supply dynamics in the Indian market. These conditions are creating an environment where:

• Early investors may be tempted to exit
• Top talent might be incentivized to leave companies

International Interest

The willingness of the Indian market to pay premium valuations has not gone unnoticed internationally. Tandon cited Korea's interest in listing companies in India as evidence of this trend.

Implications for Investors

The criticism from a respected figure like Sandeep Tandon serves as a cautionary note for investors, especially those considering participation in upcoming IPOs. It underscores the importance of:

1. Careful evaluation of IPO valuations
2. Understanding market cycles
3. Considering the long-term prospects of newly listed companies

As the Indian IPO market continues to attract attention, both domestic and international, investors would do well to heed these warnings and approach new offerings with a discerning eye.

SBI Mutual Fund has made a significant pre-IPO investment in Lenskart, the popular eyewear retailer, as the company prepares for its initial public offering (IPO). This move highlights the growing interest in Lenskart's business model and its potential in the Indian market.

Investment Details

SBI Mutual Fund has invested ₹100 crore in Lenskart through two of its alternate investment funds:

1. SBI Optimal Equity Fund
2. SBI Emergent Fund

The investment was made at ₹402 per equity share, aligning with the upper end of Lenskart's proposed IPO price band.

Share Transfer and Ownership Changes

As part of this investment:

• Neha Bansal, a promoter of Lenskart, transferred 2,487,561 equity shares.
• This transfer resulted in a slight reduction of Neha Bansal's stake in the company from 7.61% to 7.46%.

Lenskart IPO Details

Previous Share Sale

Neha Bansal had previously sold shares worth ₹90 crore to Shrikanta R Damani. The current valuation suggests a potential 52x return on her holdings, indicating significant value appreciation for early investors in Lenskart.

Investor Implications

1. Pre-IPO Interest: SBI Mutual Fund's investment demonstrates strong institutional interest in Lenskart before its public debut.
2. Valuation Indicator: The investment at ₹402 per share, matching the upper end of the IPO price band, suggests confidence in Lenskart's valuation.
3. Market Sentiment: This pre-IPO round may positively influence retail investor sentiment towards the upcoming public offering.

As Lenskart prepares to go public, investors will be closely watching how this eyewear retailer performs in the stock market, especially given the strong pre-IPO interest from institutional investors like SBI Mutual Fund.