Startup IPOs Face a Challenging Market

Current Landscape of Startup IPOs

MUMBAI: With startups increasingly flocking to Dalal Street amid a booming primary market, many large listed companies find themselves trading below their IPO offer price. This trend raises concerns about the long-term value these companies can offer to investors.

Struggling Startup Stock Performance

According to data from exchanges and Prime Database, nearly 10 startups, including Swiggy, FirstCry, Paytm, Ola Electric, and Delhivery, are currently trading below their initial offer prices. Analysts attribute this issue to market volatility and broader corrections. However, the more significant factor appears to be the lukewarm growth of these companies, which has failed to meet market expectations.

Investor Sentiment and Market Response

“The realization that performance is not meeting expectations is resulting in disappointment and value correction,” stated Nikunj Doshi from Bay Capital. While many startups have used acquisitions to show topline growth, it remains uncertain if these gains are translating into bottom-line profits.

Surge in Startup Listings

Since 2021, over 30 startups have launched their IPOs, taking advantage of regulatory easing and favorable valuations in public markets. Following the successful billion-dollar IPOs of companies like Lenskart, Groww, and Meesho, others such as PhonePe, Zepto, Oyo, and Flipkart are preparing for their market debut in 2026.

Looking Ahead: Valuation Concerns

Most recently listed startups are faring better, trading above their offer prices. However, analysts caution that the true performance of digital companies should be assessed six months post-listing. "These companies are primarily funded by venture capital and private equity investors whose lock-in periods expire after six months. When this happens, the market can experience an influx of shares, making it challenging to absorb,” Doshi explained.

Valuation Trends in Tech Businesses

Public market valuations for tech-driven businesses have significantly adjusted since their peak. For example, high-quality SaaS companies that once traded at mid-teens revenue multiples are now experiencing lower market benchmarks. According to Mehekka Oberoi, a fund manager at IIFL Fintech Fund, this reflects both multiple compression and a slowdown in growth relative to earlier expectations.

Conclusion: Challenges Ahead for New Listings

As the new wave of startups prepares to list, they may have to navigate lower valuations compared to their last private funding rounds. The future landscape for startup IPOs looks complex, with fluctuating investor sentiment and evolving market expectations.