Arabic
English
Gujarati
Hindi
Kannada
Marathi
Telugu
One of the leading transaction consultants to internet businesses in India predicts that by 2027, over three dozen Internet startups with a combined worth of $100 billion would go public, signaling a recovery in stock sales in the nation.
Companies looking to list in the nation, which was the second-largest market for share sales globally last year but has since lost pace, include accommodation provider Oyo Hotels, payments company PhonePe, and online retailer Flipkart, which is owned by Walmart Inc. According to a survey by the domestic investment bank The Rainmaker Group, the majority of businesses getting ready for an IPO have managed to mix rapid expansion with profitability.
According to Rainmaker managing partner Kashyap Chanchani, young businesses are doing better now than they were in 2021 and 2022, when a number of startups that aimed to take advantage of India’s thriving capital markets crashed after going public at high valuations. Since its IPO, payment company Paytm has lost almost 63% of its value, while cosmetics shop Nykaa has lost 4%.
“The financial health of the startups due to list in the next two years is materially better than the companies that listed previously,” Chanchani, who helped Indian startups raise $1 billion in equity last year, said in an interview. “Two-thirds of these firms are already profitable, and they are also doing a better job with transparency.”
Oyo and e-commerce startup Swiggy are among Rainmaker’s clients, and the company usually gets a share of the funding agreements it helps set up. It doesn’t offer IPO advice to businesses.
In the first quarter, the Indian stock market faltered, resulting in a 34% decline in share sales. After rising for nine years in a row, the benchmark NSE Nifty 50 Index began to fall in late September when a number of experts lowered their forecasts for corporate earnings and the economy unexpectedly slowed down.
India’s first-quarter IPO, block sale, and share placement earnings almost halved to $7.1 billion, falling short of Hong Kong’s and Japan’s.
However, Chanchani is one of the bankers who believes that in the upcoming months, when a number of sales are anticipated to enter the market, deals in India would increase. These include the Indian division of LG Electronics Inc., which may raise up to $1.7 billion, and Ather Energy Pvt., a manufacturer of electric scooters, which might get around $400 million.
Large investors like SoftBank Group Corp. and Prosus NV would have a much-needed exit if startup IPOs increased. Prosus invests in e-commerce company Meesho and home services startup Urban Company, while billionaire Masayoshi Son’s SoftBank Vision Fund has shares in businesses including Oyo, optometrist Lenskart Solutions Pvt., and used-car seller CARS24 Solutions Pvt.
Chanchani warned that IPOs will need to be priced carefully because retail investors will reject high valuations, but firms like SoftBank and Prosus “have a dozen companies or so where they are sitting on massive gains, and several of these firms have begun seeking the public markets route.”
Businesses that plan to go public will need to allay investor fears about a faltering economy and profits growth. A stock market that has already lost hundreds of billions of dollars since late last year has been further pressured by the collapse of some of India’s recently listed equities following the lifting of sales restrictions.
After China and the United States, India’s startup industry is still one of the largest in the world. However, there have also been significant corporate governance failures, declining values, and profits that have turned to dust. Some fledgling businesses have collapsed, while others have been forced to reduce employment and expansion plans. Teacher-turned-entrepreneur Byju Raveendran’s eponymous online tutoring business illustrates how a once high-flying company can run aground as investors lose faith in founders once-labeled charismatic.
“One of the key questions that investors ask us often is — can we trust the founders?” Chanchani said.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream formerly known as CIO News LinkedIn Account | The Mainstream formerly known as CIO News Facebook | The Mainstream formerly known as CIO News Youtube | The Mainstream formerly known as CIO News Twitter |The Mainstream formerly known as CIO News Whatsapp Channel | The Mainstream formerly known as CIO News Instagram
About us:
The Mainstream formerly known as CIO News is a premier platform dedicated to delivering latest news, updates, and insights from the tech industry. With its strong foundation of intellectual property and thought leadership, the platform is well-positioned to stay ahead of the curve and lead conversations about how technology shapes our world. From its early days as CIO News to its rebranding as The Mainstream on November 28, 2024, it has been expanding its global reach, targeting key markets in the Middle East & Africa, ASEAN, the USA, and the UK. The Mainstream is a vision to put technology at the center of every conversation, inspiring professionals and organizations to embrace the future of tech.
