India’s $100B Startup IPO Boom: Flipkart, PhonePe & More Set to List

More than three dozen Indian tech startups, worth a total of $100 billion, are planning to sell their shares to the public by 2027. This would be a big step forward for the Indian stock market, which has slowed down in recent times.

Some of the well-known companies that may go public include Flipkart, a popular online shopping platform owned by Walmart, digital payments company PhonePe, and Oyo Hotels, which provides lodging services. India was the second-largest country for stock sales last year, but the excitement has faded. However, many startups preparing for an IPO (Initial Public Offering) have found a way to balance fast growth and making a profit, according to The Rainmaker Group, an investment bank that advises internet companies.

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Startups in Better Financial Shape

According to Kashyap Chanchani, the managing partner at Rainmaker, the startups that will list their shares in the next two years are financially stronger than those that went public in 2021 and 2022. Some companies that listed back then saw their stock prices drop drastically. For example, Paytm’s stock has fallen by 63% since its IPO, and Nykaa’s stock has dropped by 4%.

Chanchani said that about two-thirds of the upcoming startups are already profitable, and they are also being more transparent about their financial details. This could make investors more confident in buying their shares.

Indian Stock Market Facing Challenges

India’s stock market has been struggling recently. The number of share sales in the country fell by 34% in the first quarter of this year. The Nifty 50 Index, which had been rising for nine straight years, started falling in late September because of slower economic growth and weaker company earnings.

Because of this, the total money raised from IPOs and share sales in India dropped to $7.1 billion in the first quarter—less than what was raised in Hong Kong and Japan. However, Chanchani believes that stock sales will improve in the coming months. Some major companies, such as LG Electronics’ Indian branch and electric scooter company Ather Energy, are expected to sell their shares soon. LG could raise around $1.7 billion, while Ather Energy might raise $400 million.

Big Investors Looking for an Exit

A wave of startup IPOs would help major investors like SoftBank and Prosus, who have invested in many Indian companies. SoftBank, led by billionaire Masayoshi Son, has invested in Oyo, eyewear brand Lenskart, and used-car seller CARS24. Meanwhile, Prosus has invested in e-commerce platform Meesho and home services company Urban Company.

These investors have made huge profits from their investments and are looking for opportunities to sell some of their shares to the public. However, Chanchani warns that IPOs will need to be priced fairly. If companies ask for too much money, regular investors might not be willing to buy their shares.

Investors Still Cautious

Even though more companies are preparing to go public, there are still concerns. The Indian economy is slowing down, and some companies that recently went public have lost value after early investors were allowed to sell their shares. The Indian stock market has already lost hundreds of billions of dollars since late last year, adding to investors’ worries.

India has one of the largest startup ecosystems in the world, after the US and China. However, the country has also seen cases of poor management, falling valuations, and once-profitable businesses struggling to survive. Many startups have had to fire employees and reduce their expansion plans, while some have even shut down completely.

One example is Byju’s, the online education company founded by former teacher Byju Raveendran. It was once considered one of India’s most successful startups but has now faced major financial troubles. Many investors are now more cautious and often ask, “Can we really trust the founders of these companies?”

Despite these challenges, experts believe that India’s stock market will bounce back, and the next wave of startup IPOs could bring new excitement to the industry.