Sat Nov 16 13:35:03 IST 2024: ## Infosys Co-founder Warns of Overvalued Indian IPO Market
**MUMBAI** – Amidst a record-breaking year for Indian Initial Public Offerings (IPOs), Infosys co-founder N.R. Narayana Murthy has issued a cautionary note, expressing concern over the high price-to-earnings (P/E) ratios prevalent in the market. With IPOs raising a staggering ₹1.19 lakh crore ($14 billion) in 2024 – second only to the US globally – Murthy voiced skepticism towards companies boasting P/E ratios exceeding 25, labeling them as “speculative.”
The surge in IPO activity, fueled by high demand and ample liquidity, has seen major players like Swiggy and ACME Solar successfully raise billions, further underscoring the robust investor appetite. Hyundai Motors and Life Insurance Corporation of India also contributed significantly to the record-breaking fundraising. Investment bankers point to strong investor returns – with 49 out of 68 companies listed this year trading above their offer price – as a key driver of this momentum, predicting continued activity. The rise in demat accounts to 179 million also reflects increased retail investor participation.
However, Murthy urged startups to prioritize prudent spending, cost control, and market growth over excessive expenditure, advocating a more conservative approach to capitalize on the current market conditions. His concerns highlight a potential disconnect between the exuberance of the current IPO market and the underlying financial health of some participating companies.
First Piper 