Surge in Startup IPOs: Fresh Issues Valued at Rs 18,000 Crore
India’s startup ecosystem is experiencing a resurgence in public fundraising, with at least 12 emerging tech companies filing draft IPO papers this year. Collectively, these firms aim to raise over ₹18,000 crore (approximately $2.2 billion) through new share issuances. This trend signifies a notable shift towards local stock markets, even among mid-sized and smaller digital-first ventures, as they seek to capitalize on favorable market conditions.
Leading the Charge: Major Players in the IPO Race
Among the frontrunners in this wave of initial public offerings (IPOs) is e-commerce giant Meesho, which is preparing to launch a fresh issue worth ₹4,250 crore through a confidential filing expected soon. Following closely is edtech firm PhysicsWallah, aiming to raise ₹4,000 crore. Other notable participants include fintech companies Pine Labs and Groww, targeting ₹2,600 crore and ₹1,735 crore, respectively. Additionally, companies like Boat, Wakefit, Capillary Technologies, and Urban Company plan to raise smaller amounts, each under ₹1,000 crore. It is important to note that these figures do not account for the offer-for-sale portions, which could further increase the overall size of the IPOs.
Investment bankers have observed a growing preference among startups for Indian listings over international exchanges. According to analysts at Bank of America Global Research, India has emerged as the third-largest IPO hub for internet companies, trailing only the United States and China. Many internet firms that were previously based overseas are now returning to India to take advantage of stronger local valuation multiples.
Confidential Filings and Strategic Goals
Six of the twelve firms, including Groww, PhysicsWallah, Shiprocket, Shadowfax, Boat, and Meesho, have chosen the confidential route under Securities and Exchange Board of India (Sebi) regulations. This approach allows them to adjust their IPO sizes and keep financial details private until they are ready to make a public announcement. The motivations behind these IPOs vary widely. Some companies are looking to fund growth, research, and expansion, while others aim to repay debt or bolster working capital.
For instance, Urban Company reported a net profit of ₹240 crore in FY25, a significant turnaround from a ₹93 crore loss the previous year. Similarly, Groww’s net profit surged to ₹1,819 crore on revenues of ₹4,056 crore, highlighting the improving fundamentals of these startups. Shadowfax also reported operational profits while significantly reducing its net losses, showcasing a trend of financial recovery among these firms.
Market Sentiment and Future Outlook
Despite the cautious sentiment among investors, particularly regarding loss-making firms, there is a willingness to consider IPOs if there is clarity around profitability and cash flow projections. An investment banker noted that many startups are now approaching public markets due to their maturity, with several being profitable or market leaders, or demonstrating strong growth potential.
This current trend stands in contrast to the mega-IPOs of 2021-22, when major companies like Zomato, Paytm, Delhivery, PB Fintech, and Nykaa collectively raised over ₹25,000 crore. In recent times, smaller issues have taken precedence, with firms such as Ixigo, Awfis, Blackbuck, and Honasa Consumer opting for IPOs below the ₹1,000 crore threshold. Market volatility had previously raised concerns about listing prospects, especially following international policy changes. However, companies are now filing draft red herring prospectuses in anticipation of favorable market conditions that could help them achieve their desired valuations.
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