Lenskart's IPO Debut Faces Volatility Despite Oversubscription

Shares of Lenskart Solutions Ltd., backed by SoftBank, experienced a rocky debut on Monday, slipping as much as 11% below their issue price before staging a minor recovery. The shares were last trading slightly higher at 402.2 Indian rupees, which is just above the IPO issue price of 402 rupees.

This lackluster performance stands in stark contrast to the recent success of other startups like Urban Company, which saw a 60% rise on its debut just a month prior. Lenskart's IPO raised $828 million and was highly anticipated, with demand exceeding 28 times the shares available.

Institutional investors and high-net-worth individuals were the primary drivers of this interest, while retail participation remained subdued. According to Bhavesh Shah, head of investment banking at Equirus Capital, many smaller investors are seeking quick profits, leading to a trend of jumping from one IPO to another.

This behavior creates selling pressure on the listing day. A study by India's Securities and Exchange Board revealed that 54% of shares allotted to investors, excluding anchor investors, are sold within a week of listing.

Between April 2021 and December 2024, retail investors sold 50% of their allotted shares by value within a week of listing, and 70% by value within a year. This trend raises questions about investor confidence and the sustainability of tech startups in the current market landscape.

Lenskart's IPO performance underscores the complexities faced by tech startups in volatile market conditions, highlighting the challenges they encounter in securing future funding. As the landscape evolves, investor sentiment and market conditions will play crucial roles in determining the trajectory of such offerings moving forward.

The implications of Lenskart's debut could impact investor behavior and future public offerings in India, reflecting wider trends in the tech sector and its interaction with market dynamics.