Indian companies are increasingly turning to Qualified Institutional Placements (QIPs) to raise capital, but a troubling pattern is emerging. Firms that secure funds during periods of peak market valuation often struggle to maintain performance, leaving investors holding depreciating assets.
The QIP Boom and Its Pitfalls
According to Securities and Exchange Board of India (Sebi) data, Indian companies raised ₹50,106 crore through 25 QIPs during April-September 2025. Although this represents only half the number of deals compared to the year-ago period, the funds mobilized were merely 22.6% lower than the ₹64,750 crore raised from 50 QIPs a year earlier.
A QIP provides listed companies with a fast-track mechanism to raise equity capital directly from institutional investors—bypassing the need to approach the broader shareholder base. This route is particularly attractive when market sentiment is bullish and stock prices command premium valuations.
However, this convenience comes with significant risks. Companies typically tap institutional money when their stock prices are soaring and confidence is at its peak. The subsequent period often reveals a different reality: earnings growth slows, operational challenges emerge, and share prices correct sharply.
Four Cautionary Tales for Investors
PG Electroplast: Down 20% from QIP Price
PG Electroplast Ltd, a significant player in India's Electronic Manufacturing Services (EMS) sector, raised ₹1,500 crore through a QIP in December 2024 at ₹699 per share. At the time, the stock traded at a staggering 110 times price-to-earnings (P/E) multiple.
Initially, the strategy appeared successful. In Q4 FY25, revenue doubled to ₹1,910 crore from ₹1,077 crore a year earlier, while profit after tax (PAT) jumped to ₹145 crore from ₹70 crore. However, the momentum proved short-lived.
In Q1 FY26, revenue growth decelerated sharply to 13.8%, and PAT fell 20.2% to ₹67 crore. The stock plummeted 38% within days, from ₹790 on August 5, 2025, to ₹490 by August 14. It currently trades at ₹560, down 47% from its January all-time high of ₹1,054.
The weakness stemmed from lower-than-expected AC volumes and negative operating leverage impact due to an early monsoon. The company has since revised its FY26 guidance downward.
Amber Enterprises: Down 10% from QIP Price
Amber Enterprises India Ltd, a backwards-integrated B2B solutions provider with significant presence in room AC manufacturing, raised ₹1,000 crore through a QIP in September 2025 at ₹7,950 per share—reflecting a P/E of over 110 times.
The stock initially climbed to ₹8,626 by late October, bolstered by positive sentiment. However, the company soon reported a loss of ₹32 crore in Q2 FY26, accompanied by a 2.2% revenue decline to ₹1,647 crore. Higher finance costs and elevated inventory levels in the room AC business drove the disappointing results.
The market reacted sharply, with the stock closing 7.7% lower on November 7 at ₹7,227. It now trades at ₹7,122, down approximately 10% from its QIP price and nearly 17% below its October peak.
Torrent Power: Down 14% from QIP Price
Torrent Power Ltd, an integrated power utility, raised ₹3,500 crore through a QIP in December 2024 at ₹1,503 per share—marking the Torrent Group's first equity issuance in over three decades. At the time, the stock traded at about 35 times earnings.
The subsequent quarters failed to justify this elevated valuation. In Q4 FY25, revenue remained flat at ₹6,456 crore, while profit before tax showed minimal movement at ₹619 crore. The slowdown became more pronounced in Q1 FY26, with revenue declining 12.5% year-on-year to ₹7,906 crore and PAT dropping 25.5% to ₹742 crore.
Since the QIP, the stock has corrected about 14% to ₹1,294 and is down nearly 25% from its 52-week high of ₹1,720 per share.
Samvardhana Motherson International: Down 18% from QIP Price
Samvardhana Motherson International Ltd, India's largest auto ancillary company, raised ₹6,438 crore in September 2024 at ₹133 per share (adjusted for bonus issue), when the stock traded at nearly 45 times earnings.
From Q4 FY25 onward, the company's performance softened significantly. Profitability declined 22.8% in Q4 FY25, followed by drops of 44.7% and 10.8% over the next two quarters. The stock now trades at approximately ₹109 per share—almost 18% below the QIP price.
The Investor Takeaway: Valuations Matter
These examples illustrate a clear market pattern: when companies raise capital at stretched valuations, even minor operational setbacks can trigger substantial corrections. Other companies like Sona BLW have experienced similar fates, with the stock down 30% from its QIP price of ₹690 to the current ₹489.
The trend continues with Swiggy planning to raise another ₹10,000 crore through a QIP, shortly after mobilizing ₹4,500 crore via its IPO a year earlier. This move comes amid intensified competition in the quick-commerce sector, where players are burning cash to chase growth.
For investors, the lesson is clear: while QIPs can strengthen balance sheets and fund expansion, the valuation at which capital is raised leaves minimal room for error. When market expectations outpace fundamental performance, the downside risk often materializes faster than the promised growth.
