Analysis: India’s IPO boom has rapidly turned to bust

I am “just overwhelmed,” said Vijay Shekhar Sharma, while wiping tears from his eyes. He was addressing an audience at the listing ceremony of One97 Communications, the parent company of digital payments giant Paytm. Sharma founded the company nearly two decades ago. In the last five years, Paytm has become the darling of India’s booming fintech sector, and is backed by big-name global investors such as SoftBank (SFTBF) and Warren Buffett. In 2021, One97 raised $2.5 billion in the country’s biggest ever initial public offering (IPO). During November’s listing ceremony, Sharma called the company’s purpose of bringing millions of Indians into the mainstream economy “pious.”In an email to CNN Business, OYO “strongly” denied the assertions made in the report. “OYO continues to receive investor interest as we await approval from the regulator,” it added, but declined to disclose any specific details. Paytm’s smaller rival Mobikwik has said it would defer its IPO, originally planned for November last year, by a few months. The company told CNN Business last year it would “list at the right time,” without sharing any other details. Despite the current turmoil, most global investors say that India remains attractive for them, provided companies coming to market are more realistic about their valuations. “There is no emerging market that offers the growth opportunities that India does,” said Nuno Fernandes, portfolio manager of the emerging wealth strategy at GW&K Investment Management. But he also said that he found most valuations by Indian tech giants last year “completely unwarranted” and hopes other startups would be more cautious now. “My recommendation to the management is that it is better to be modest and be successful in the IPO, rather than have it falter.”