IPO frenzy turning murky amid lack of transparency, says market veteran Sandip Sabharwal
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Even as benchmark indices continue to witness renewed selling, the real buzz in the market has shifted to the primary market. But veteran investor Sandip Sabharwal believes the ongoing IPO frenzy may not be as healthy as it appears on the surface. In a candid conversation with ET Now, Sabharwal warned that the entire IPO story is “becoming more and more murky,” citing a worrying pattern of companies suddenly turning profitable just ahead of their public issue. “Many of these companies are reporting profits only in the last quarter before they come for IPO, or the last year after being in losses for years,” he said. This trend, he added, raises serious questions about transparency and earnings quality. According to Sabharwal, despite such red flags, these IPOs are being “lapped up” by large institutional investors, which in turn triggers a herd response from retail investors. The consequence, he noted, is an overheated primary market and a...