New Age IPOs Struggle Amid Declining Investor Sentiment

The recent debut of new-age initial public offerings (IPOs) has highlighted a significant shift in investor sentiment, particularly following the lacklustre performance of the eyewear retailer Lenskart. On its first trading day, Lenskart's shares opened at ₹390, which was a 3% decline from the IPO price of ₹402. This disappointing start has raised concerns among investors regarding the viability of other upcoming IPOs in the technology and digital sectors.

Impact of Lenskart's Performance
Lenskart's listing, which had generated considerable excitement, resulted in a grey market premium that fell sharply from a peak of ₹108 to zero prior to its debut. Analysts are now questioning whether the enthusiasm for high-valuation digital companies is waning. As a result, the grey market premiums (GMPs) for other new-age IPOs have also been negatively impacted. For example, the GMP for the investment platform Groww has decreased from ₹16 to just ₹5, while the IPO of edtech company PhysicsWallah has seen its GMP halve from ₹9 to ₹4. Similarly, Pine Labs, once boasting a GMP of ₹35, is now experiencing a drastic drop to approximately ₹4.

Groww IPO: Strong Subscription but Cautious Outlook
The IPO of Billionbrains Garage Ventures, the parent company of Groww, raised ₹6,632 crore and closed on November 7 with an overall subscription rate of 17.6 times. The response from qualified institutional buyers was particularly strong at 22 times, while the retail portion was subscribed 9.4 times. Groww, which provides a platform for digital investments, including mutual funds and stocks, reported a net profit of ₹1,824 crore in the fiscal year 2025, with revenues of ₹4,061 crore. However, despite this strong financial performance, analysts have suggested that the company's valuation—around 40 times its FY25 earnings—could be seen as fully priced. The allotment results for Groww are expected on November 10, with its market debut set for November 12.

PhysicsWallah's Upcoming IPO Under Scrutiny
The ₹3,480 crore IPO of PhysicsWallah, scheduled to open for subscription on November 11, is also facing mixed sentiments. This offering consists of a fresh issue of ₹3,100 crore along with an offer for sale of ₹380 crore, with shares priced between ₹103 and ₹109. PhysicsWallah has built a substantial presence in the edtech sector, boasting over 13 million YouTube subscribers and 4.4 million paid users. However, the company reported a loss of ₹243 crore in FY25, raising concerns about its financial stability amidst declining GMP.

Pine Labs: Subdued Market Response
Meanwhile, the ₹3,890 crore IPO of Pine Labs has witnessed a tepid response, with only 38% of the offer subscribed by the second day of bidding. This IPO includes an offer-for-sale component of ₹1,819 crore priced at ₹221 per share. Pine Labs operates in the digital payments sector, providing software solutions and financing for retailers. Despite a revenue increase to ₹2,274 crore in FY25, the firm reported a net loss of ₹145 crore, contributing to the cautious market sentiment.

The overall mood among investors appears to be shifting towards caution as they reassess their risk appetite for new-age tech firms, particularly in light of Lenskart's disappointing market entry. Analysts have indicated that the recent declines in GMPs reflect broader concerns about the valuations of these companies, especially when compared to established players within the industry. As the market continues to evolve, the performance of these IPOs will be closely monitored, with the expectation that investors will demand sustainable growth and profitability rather than mere revenue increases or one-off gains.

As one analyst noted, “When you price perfection, even a great company can disappoint on listing day.” The coming weeks will reveal whether the initial struggles of these IPOs signal a longer-term trend in the market or if they represent temporary setbacks.