What Tech-Led IPOs Mean for Retail and Institutional Investors Global and domestic institutions increasingly treat consumer-tech IPOs as part of their long-duration growth bucket, comparable to specialty retail or branded consumer platforms rather than traditional loss-making tech ventures. Retail investors, however, are engaging with offerings such as this in a structurally different risk environment.
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Lenskart's impending public market debut came at a time when India's new-age consumer internet companies are facing heightened scrutiny around valuation, profitability, and governance.
Over the past four years, India has seen more than USD 30 billion raised by venture-backed consumer and tech firms, many of which pursued growth-first strategies driven by private capital abundance. However, post-listing performance has been uneven. Since 2021, several of the new-age IPOs have corrected sharply from their original issue prices, with drawdowns of 40-70 percent at various points, underscoring the growing divergence between private-market optimism and public-market discipline. This environment has made investors far more sensitive to unit economics, cash flow visibility, and the path to sustainable profitability.
Tarun Singh, MD and Founder, Highbrow Securities, told Entrepreneur India that Lenskart and its peer new-age companies represent a distinct asset class where the experiences of retail and institutional investors are fundamentally different.
"Institutional investors approach these IPOs as strategic growth allocations within diversified portfolios, equipped to absorb short-term volatility and valuation resets. Institutions often have enhanced capabilities to analyze complex business models, understand technology-driven value creation, and maintain conviction through market gyrations," said Singh.
Global and domestic institutions increasingly treat consumer-tech IPOs as part of their long-duration growth bucket, comparable to specialty retail or branded consumer platforms rather than traditional loss-making tech ventures. India's eye-wear and vision care market is estimated at over USD 7 billion, and for institutions, brands like Lenskart's omnichannel footprint, private-label margins, and technology-led supply chain offer levers for operating leverage over a five-to-ten-year horizon, even if near-term earnings remain volatile.
Retail investors, however, are engaging with offerings such as this in a structurally different risk environment. Retail participation in IPOs has surged dramatically, with demat accounts crossing 150 million and retail subscription levels often hitting 10-20 times in high-profile issues.
One of the first marquee tech-driven consumer platform IPOs in India, Zomato raised approximately INR 9,375 crore and received strong subscription demand. The stock debuted with a significant premium on the issue price, reflecting early investor optimism. Over time, the company improved its unit economics and reported profitability, which supported a recovery and further gains in its share price in subsequent years.
Singh said, "Retail investors typically face a more binary risk-reward equation. Their investment horizon tends to be shorter, and capital allocation is generally more constrained. For this cohort, the premium valuations of Lenskart-like IPOs raise immediate concerns about near-term price correction risks, especially if profitability milestones are not promptly evident."
Singh added that retail participation is often influenced by market hype and a lack of granular due diligence, which can lead to vulnerability as these stocks undergo price discovery post-listing.
The growing difference between institutional underwriting logic and retail participation behaviour is highlighting an important policy and advisory challenge. As India's capital markets mature, clearer disclosures around contribution margins, cohort-level profitability, and cash burn trajectories become critical.
"Ultimately, through the same IPO, these companies cater to two distinct perceptions: to institutions, they are long-duration growth stories with the potential for asymmetrical returns; to retail participants, they are high-stakes gambles sensitive to market sentiment and timing. Recognizing this duality is essential for advisors and regulators to tailor communication, education, and investment frameworks appropriately, ensuring that retail investors appreciate the risks distinct from their institutional counterparts," said Singh.
