What does an IPO priced at 202 times earnings say about our markets?

Prataap Snacks Ltd’s initial public offering (IPO), like others in the recent past, has been a breeze. It sold the maximum permissible 30% of its issue to anchor investors; and now, the remainder of its issue has been fully subscribed on the second day of bidding.

It’s almost as if investors are oblivious to the fact that the issue is priced at 202 times earnings for the year till March 2017. This shouldn’t be surprising—while valuations of Indian markets seem all right from a top-down perspective, things have been out of whack for quite some time now for many sectors and individual stocks. The Prataap Snacks issue, then, just underlines the bubble in various pockets of the Indian market.

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