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Indian equity markets have been full of surprises lately. The latest jaw dropper is the over-revved response to the initial public offering (IPO) of Resourceful Automobile, a dealer of Yamaha motorcycles in New Delhi with a couple of outlets, a service centre and a few dozen employees.Â
For the â‚ą12 crore it wanted to raise, aimed at expanding its network of showrooms, the company got applications worth â‚ą4,800 crore. That’s a whopping 400 times. It’s possible that applicants for its shares have studied its market potential and ability to scale operations up.Â
More likely, though, it’s yet another sign of irrational exuberance in India’s frothy stock market, where too much money has been chasing too few stocks for quite some time now. Small-cap firms, especially, have seen their price-earning multiples zoom to dizzying heights.Â
One can only hope we aren’t staring at a proverbial “shoeshine advice” moment in the resplendent performance of Resourceful’s IPO, a point at which a collective realization dawns upon market participants that ever-increasing sums of money being funnelled into equities as casino-style bets might be a good time to exit.
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