Vishnu Bhardwaj’s report for Obnews-
Risk In Expensive IPOs: The same institutional investors i.e. fund houses who are bringing recession by calling the Indian stock market expensive even at a PE ratio of 20 to 30, are putting the savings of retail investors at stake by investing fearlessly in companies launching very expensive IPOs at a PE ratio of 100 to 1,000. The latest example of this is that 41 anchor investors have invested Rs 921 crore in the most expensive IPO of the green energy sector, CleanMax Enviro Energy Solutions Ltd.
In the IPO of Clean Max, which was launched at the most expensive valuation of Price-to-Earnings Ratio (P/E Ratio) of 400, these institutional investors have bought more than 87.46 lakh equity shares at Rs 1,053 per share as anchor investors. The Rs 3100 crore IPO of Clean Max, which was in loss till last year, opened on February 23 and will close on February 25. On the first day on Monday, retail investors stayed away from Clean Max IPO due to its very expensive valuation.
Only 2 percent investment was received in the retail category on the first day. Whereas in the QIB category, many institutional investors bought 61.40 lakh more shares of Clean Max. The big question is why did these funds invest the money of lakhs of retail investors in this risky IPO at such an expensive price? Will SEBI officials pay attention to this serious issue?
IPO price Rs 10,530, P/E ratio of 400:
Clean Max has priced its Re 1 face value equity share at Rs 1,053. If calculated from the face value of Rs 10, then the share price of Clean Max is Rs 10,530 i.e. more than Rs 10 thousand. Solar and wind power producer Clean Max had suffered a loss of Rs 97 crore in FY 2023 and 2024 and in FY 2025 it had a net profit of only Rs 19 crore and EPS of just Rs 2.80.
What is this ‘compulsion’ Is there any ‘selfish’ Is?
The institutional investors who have invested as anchor investors in the IPO of Clean Max, which made a nominal profit of Rs 19 crore, include Temasek Holdings, Nomura, Eastspring, HDFC, Tata Investment, Abu Dhabi Investment, Franklin Templeton Mutual Fund, SBI Life, SBI General, Premji Invest, 360 One Mutual Fund, Societe Generale, These include Citigroup Global, India First Life Insurance, Canara HSBC Life and Bharti AXA Life Insurance.
There are many Indian fund houses among them, in which lakhs of retail investors are invested. The big question is why did these fund houses put retail investors’ money at stake in such an expensive IPO of Clean Max? Whereas many expensive IPOs launched in the last years including Paytm, Ola, Swiggy, Firstcry, Nykaa, Meesho, Zaro, Vikram Solar, Dam Capital have suffered huge losses. Then what is such ‘compulsion’ Is there any ‘selfish’ Why are these fund houses still investing crores in these expensive IPOs?
Also read: Growing greed! The most expensive IPO in the green energy sector, the price of Clean Max is Rs 10 thousand per share.
Why are promoters selling their shares?
Clean Max management and its greedy merchant bankers are justifying the expensive imaginary valuations in the IPO. If they expect bumper profits from the company, then why are promoters and institutional investors selling their stake? The purpose of this Rs 3100 crore IPO is to repay the loan, but out of Rs 3100 crore, Rs 1900 crore is Offer for Sale (OFS).
The company will get only Rs 1200 crore to repay the loan. Whereas the company has a huge debt burden of more than Rs 8,000 crore. It is clear from this that this IPO has been brought not to reduce the debt burden of the company but to fill the pockets of the promoters and old investors. Still, 41 anchor investors invested Rs 921 crore. It’s a topic of concern
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