In the world of stock markets, few stories capture the thrill and heartbreak of retail investing quite like Paytm's dramatic fall from grace. Four years ago, in November 2021, One97 Communications—better known as Paytm—launched what was then India's largest IPO, valued at a staggering ₹18,300 crore with a company valuation touching ₹1.4 lakh crore. The hype was electric: billboards, TV ads, and social media campaigns painted Paytm as the gateway to a cashless India, powered by UPI's revolutionary potential. Founder Vijay Shekhar Sharma positioned himself as a visionary, often drawing parallels to global icons like Elon Musk. Venture capital giants like Alibaba and SoftBank had poured billions into it, lending an aura of unassailable credibility. Retail investors, swept up in the fervor, oversubscribed the issue 1.8 times, dreaming of instant riches.
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| Going public too early is a mistake. Small cap IPOs rarely work. |
But reality hit hard. The stock debuted with a 9% drop and plummeted further, shedding 70% of its value by mid-2022 amid regulatory scrutiny from the RBI, which banned Paytm Payments Bank's new customer onboarding. Locked-out features, mounting losses (over ₹1,500 crore annually at the time), and fierce competition from Google Pay and PhonePe eroded the narrative. As of November 2025, Paytm's shares hover around ₹600—still far below the IPO price of ₹2,150—despite recent efforts to refocus on core lending and payments. This saga isn't just a cautionary tale for Paytm investors; it's a blueprint for the pitfalls awaiting those chasing the next big "tech" IPO. Fast-forward to today, and the spotlight has shifted to Lenskart, the eyewear retailer whose ₹7,000 crore IPO in late 2025 promised similar fireworks but delivered only duds.
Lenskart's debut was billed as a triumph of Indian entrepreneurship. Founder Peyush Bansal, a staple on the TV show Shark Tank India, embodies the self-made success story: a Harvard Business School alumnus who bootstrapped a vision to disrupt the fragmented eyewear market. With over 1,500 stores across India and a robust e-commerce presence, Lenskart has indeed democratized affordable, stylish glasses, capturing nearly 10% of the organized eyewear segment. The IPO, priced at ₹382–₹402 per share, was oversubscribed 28 times, with bids totaling over ₹1 lakh crore. Retail investors, inspired by Bansal's on-screen charisma and influencer endorsements from celebrities like Virat Kohli, rushed in hoping for listing-day gains.
Yet, beneath the gloss lay glaring red flags. Lenskart's valuation of ₹70,000 crore—nearly matching the entire Indian eyewear market's size of ₹90,000 crore—defied logic. Its price-to-earnings (PE) ratio clocked in at an astronomical 230, dwarfing the Nifty 50's average of 22 and even high-growth peers like Titan Eye+ (PE around 80). For context, global eyewear giants like Luxottica trade at PE ratios under 30, reflecting mature profitability. Bansal himself, ironically, preaches caution on Shark Tank, routinely rejecting pitches with PE ratios above 20–30, emphasizing sustainable growth over hype. In July 2025, he bought back employee stock options at just ₹52 per share—a 700% markup by IPO time—raising eyebrows about insider timing.
This isn't isolated opportunism. Lenskart turned profitable only months before the IPO, thanks to a one-time settlement that masked underlying cash burn. Revenue growth is impressive (projected 25–30% CAGR through 2027, per analyst reports), but margins remain thin at 5–7%, pressured by expansion costs and competition from Warby Parker-inspired startups. The IPO allowed Bansal and early investors to offload ₹800 crore in shares, while retail allottees eked out a meager 2% listing premium before the stock flatlined. As of November 12, 2025, it's trading marginally above issue price, but analysts warn of downside risks if consumer spending slows amid inflation.
The Lenskart debacle echoes a disturbing pattern in India's IPO ecosystem, where "tech" labels inflate valuations for mundane businesses. Eyewear, cosmetics, and ride-hailing aren't Silicon Valley innovations—they're retail plays with digital veneers. Structural flaws exacerbate this: lax disclosure norms allow companies to classify as "new-age tech" without proving scalable, data-driven moats. SEBI mandates detailed prospectuses, but buried footnotes often reveal the truth: aggressive accounting, promoter share sales, and venture capital exits disguised as public offerings. Over the past five years, 70% of tech IPOs have underperformed the Nifty by at least 20% post-listing, per BSE data, with retail investors bearing the brunt as institutions flip shares quickly.
Consider Ola Electric, Bhavish Aggarwal's audacious pivot from ride-hailing to EVs. In 2024, its ₹6,145 crore IPO valued the company at ₹33,000 crore, fueled by "Make in India" patriotism and promises of a Gigafactory to rival Tesla. Aggarwal's combative Twitter persona—clashing with critics and regulators—amplified the buzz, leading to 4.26x oversubscription. Claims of 35% market share in electric two-wheelers dazzled investors, ignoring red flags like ₹2,000 crore annual losses, supply-chain woes, and unproven battery tech. The scooters faced recalls for fires and failures, with service backlogs stretching months. Stock surged 20% on debut but cratered to under ₹50 by late 2025, wiping out ₹23,000 crore in market cap. Aggarwal's pre-IPO tweets boasted of "beating Tesla to India," but facts—regulatory fines for non-compliance and a 50% inventory pile-up—prevailed.
Mamaearth's 2023 story is equally sobering. Co-founder Ghazal Alagh parlayed her "toxin-free millennial mom" brand into viral Instagram reels, blending dance videos with baby-safe product pitches. The ₹1,700 crore IPO, at a ₹10,000 crore valuation, hyped 57% revenue growth and top Flipkart rankings. Oversubscribed 38 times, it soared 45% initially, but profitability was illusory: just ₹3.7 crore on ₹1,500 crore revenue, with a PE of 2,800. Competition from Nykaa and Honasa's crowded D2C space eroded gains; by November 2025, shares languish at ₹275, down 40% from peaks. Alagh's storytelling masked stagnant margins (under 10%) and over-reliance on e-commerce discounts.
Nykaa, the beauty e-tailer, fits the mold too. Its 2021 IPO valued Falguni Nayar's empire at ₹47,000 crore amid post-pandemic glow-ups, but persistent losses (₹246 crore in FY22) and Amazon's encroachment led to a 50% drawdown. These aren't anomalies; they're symptoms of a system where founders prioritize exits over longevity. Venture capitalists, having multiplied stakes 10–20x, cash out via IPOs, leaving retail holders with overpriced baggage.
At the heart of this frenzy lies personal branding weaponized through social media and TV. Bansal's Shark Tank wisdom, Aggarwal's nationalist barbs, Alagh's relatable reels, and Sharma's fintech evangelism create false security. These aren't just endorsements—they're monetized trust. A 2024 Deloitte study found 65% of Indian retail investors cite founder charisma as a buy trigger, versus 25% for financials. Yet, history screams otherwise: of 150+ IPOs since 2020, only 30% delivered positive returns by year three, per Prime Database analytics. Zomato bucks the trend, up 200% since its 2021 debut, thanks to genuine path-to-profitability via Blinkit synergies—but it flew under the radar amid the noise.
So, how can retail investors dodge the traps? The key is diligence over dazzle. Treat IPOs like political campaigns: hype signals spin, not substance. Here's a structured checklist of red flags to scan in prospectuses:
- Sky-High Valuations: If PE exceeds 50 (or negative for loss-makers), probe peers. Lenskart's 230x? Compare to Bata's 45x.
- Sudden Profitability: One-off gains (e.g., settlements) often reverse. Demand multi-year trends; Ola's "profits" vanished post-IPO.
- Promoter Sell-Offs: High secondary sales (>20% of issue) indicate exits. Bansal's ₹800 crore haul? A warning.
- Tech Facade: Does "AI-powered" add real value? Mamaearth's "safe ingredients" app is marketing, not moat.
- Cash Burn and Debt: EV firms like Ola guzzle capital; check free cash flow. Negative? Run.
- Market Share Claims: Verify via Nielsen or Kantar reports. Ola's 35%? Inflated by pre-IPO subsidies.
- Regulatory Risks: Pending probes (RBI for Paytm, FAME-II violations for Ola) can tank stocks overnight.
Beyond self-help, systemic fixes are urgent. SEBI could mandate "hype audits"—independent valuations pre-IPO—and cap retail exposure in oversubscribed issues to 10%. Media plays a role too: outlets like Economic Times have flagged overvaluations, but clickbait headlines amplify FOMO. Mutual funds, often early buyers, allocate just 0.5% to IPOs yet outperform via diversification—retail should emulate, not chase.
The allegation that India hosts the "dumbest IPO market" stings but holds water. Shankar Sharma, a veteran investor, coined it, citing 80% of 2021–2024 tech listings underperforming benchmarks. Data from NSE shows retail participation hit 40% of volumes in 2025, up from 25% pre-pandemic, driven by apps like Groww. Yet, average holding periods shrink to six months, amplifying volatility.
In politics or economics, data trumps rhetoric. Paytm's UPI revolution enriched VCs but scorched retail; Lenskart's lens empire may dazzle, but without profits, it's blurred vision. Founders like Bansal aren't villains—they're opportunists in a flawed game. But investors? You hold the power. Skip the Shark Tank glow-up; dive into balance sheets. Read ARs, track filings on BSE India, and diversify via index funds yielding 15% annually sans drama.
We're not born dumb; we're made so by unchecked exuberance. As readers, you're already ahead—curious, skeptical. Subscribe, engage, learn. Your next "IPO moonshot" could be a steady portfolio. In a market maturing toward $5 trillion by 2027 (per IMF projections), smart money wins. Will you join the lesson-learners, or fuel the next bust? The choice—and your wallet—awaits.
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