UTI AMC’s Ajay Tyagi Warns Investors To Choose Wisely In Booming SME IPO Space

Ajay Tyagi, head of equities at UTI Asset Management Co., views the SME IPO space with concern due to the recent influx of listings and warns that retail investors need to do their own research before investing in such IPOs.

So far in 2024, over 190 small and medium enterprises have debuted on the NSE Emerge and BSE SME platforms.

Sharing his concern, Tyagi told NDTV Profit that things may go overboard quickly in this space.

“That’s the market where you hardly see any institutional participation. That’s where the retail part of the market gets completely agog,” he said.

“SME IPOs are clearly a case of concern as far as the main markets are concerned. Here, one needs to exercise caution,” Tyagi added.

The analyst said that the good part is that India is one of the few markets where high-quality IPOs keep coming by. However, there is a concerning side as well, he noted.

“There is an 80/20 Pareto law everywhere and that goes for IPOs as well. If you are getting 100 IPOs, please bear in mind they will not create wealth for you in the fullness of time. They may give you listing gains but may not essentially be those wealth-creating companies,” Tyagi explained.

The UTI AMC analyst advises people to be cautious before investing in these IPOs.

“Eventually, some of these companies will turn out to be great businesses to hold. The onus of doing the right research or picking up these gems depends on the investor,” Tyagi said.

He also noted that liquidity is still abundant in the market, with flows by way of SIP and lump sum investment.

“The good news is that even FIIs have turned positive now. So I don’t think there is any lack of liquidity but at some stage, there will be fatigue that will catch up,” Tyagi said.

Tyagi further noted that present market conditions were not suited for lump sum investments in the secondary markets.

“This is not the time to have the feeling of missing out or playing catch-up by making one big investment into the market at this stage,” he said.

Tyagi said that the most rational thing to do at the moment is to make monthly SIP investments.