She advised investors not to invest out of fear of missing out (FOMO). Mehra pointed out that venture capitalists often invest at much lower valuations compared to IPO prices. As an example, she noted that Lenskart’s IPO was priced at eight times its last private round, and that many issues include large offer-for-sale components – meaning “all those big names are getting out at the price that you’re getting in.”
Also Read | Anand Shah says India’s market strength lies in savings moving beyond gold and real estateExplaining the role of anchor investors, Mehra said investment bankers can sometimes pressure funds to participate. To maintain good relations and access to future deals, some funds may feel “arm-twisted” into lending their name to an IPO they are not fully confident about.
Mehra drew a comparison with the 2021 new-age tech IPO boom, observing that “most of them, let alone the stock price, have not done that well on the business side.” Using Nykaa as an example, she said that many companies show their peak numbers around the IPO, after which performance often declines. “Broadly, the company gets to peak numbers around the IPO and often it is downhill from there,” she warned.
Turning to the broader market outlook, Mehra said she does not expect a significant market crash and advised investors to stick to their equity allocation plans. “I never said that the market is overstretched or that earnings won’t come through,” she clarified. According to her, sector-level valuations are “not at extreme ends” and in some cases are even below the last decade’s averages.Also Read | This $196 million fund CIO expects PSU banks, OMCs to drive next rally
She explained that the anticipated earnings recovery was delayed due to disruptions from goods and services tax (GST) changes. “My stance became that the earnings improvement you will see only in the third quarter,” she said, adding that the underlying improvement remains intact.
Reiterating her long-term investment approach, Mehra advised, “Don’t put 100% in equity ever. Whatever your equity allocation is, I don’t see the risk of a huge crash that you should sit out of the market.”
She also noted that market participation has begun to broaden. While the rally was “extremely narrow” until August, with only about 10% of stocks outperforming the index, the breadth has since widened, signalling a healthier market trend.
For the full interview, watch the accompanying video
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