The hefty valuations of IPOs are now beginning to slowly result in losses for original IPO investors. Several investors who invested in the SBI Life IPO at Rs 700, are now down a cool 10 per cent, as the shares are trading near Rs 636.
Clearly, investors are now beginning to lose money, because of the steep valuations some of the Initial Public Offerings had. However, the market conditions are such that even IPOs with p/e multiples of 70 times are getting subscribed.
So, the mantra is simple, just avoid investing in IPOs that are heavily priced. No doubt almost all of the companies mentioned above are high-quality names, they leave very little in terms of value for listing gains.
You could probably get stocks, which are much cheaper from the listed space. Why invest in stocks that are highly priced in the IPOs?