Resourceful Automobile’s $1.4 million IPO overbought 400 times. Why it’s absurd?

A planned initial public offering by an Indian motorcycle dealership with just two outlets and eight employees has been oversubscribed by more than 400 times, demonstrating how overheated the nation’s new-share market has become.
Resourceful Automobile Ltd. is seeking to raise 120 million rupees ($1.4 million), which it plans to use to repay debt and open new showrooms, according to the New Delhi-based company’s offer document. Operating under the brand name Sawhney Automobile, the company is an authorized dealer for Yamaha Motor Co. Calls placed to the firm for comment were not answered. 
Helped by buoyant demand from a swollen retail market, shares of companies going public in India this year have surged by an average of over 50% since debut, more than double the global average. The frenzy continues despite efforts by regulators to warn investors of risks and curb excessive moves.
“Many investors are putting money into IPOs just with the intention to make a quick buck,” said Vineet Arora, who manages the Singapore-based NAV Capital Emerging Star Fund. Arora, who has also invests in IPO-bound small firms, said some investors continue to ignore risks, hoping for gains by selling shares soon after trading debuts.
While the strong debut of scooter maker Ola Electric Mobility Ltd. and the planned local listing of Hyundai Motor Co.’s Indian unit have drawn attention, most offerings have been much smaller. Out of the more than 200 companies that have been listed on Indian bourses this year, some two-thirds have raised less than $10 million.