IPO Mania Gets Reality Check in India After Series of Flops
IPO Mania Gets Reality Check in India After Series of Flops

IPO Mania Gets Reality Check in India After Series of Flops

The last few years have been really good for Indian IPOs, culminating in a record year in 2021. Keeping this in mind, the IPO mania had really taken over the Indian investors with many people looking to put their money in any new upcoming IPO. But these investors were hit with a harsh reality check and many recent IPOs failed to match the hype created around them and disappointed the investors. 

Causes 

Although factors like geopolitical tensions, hikes in interest rates and economic instability and volatility have caused IPOs across the globe to have an off-year, Indian investors hoped to be an exception due to the very successful year IPOs had last year. Instead, when people were duped, authorities raised their levels of scrutiny of prospects for IPO, leading to delays in the IPO calendar for this year. 

Aftermath

And now, just weeks after closing out a milestone year for recent IPOs, India's booming startup industry faces a reckoning. According to industry insiders acquainted with the situation, A big number of well-known online companies, like Oyo Hotels as well as Delhivery (logistics firm), are postponing their IPOs and reevaluating their target audiences.

  • In the aftermath of the disappointing debut of Paytm-financial firm, and also the setbacks experienced by the e-commerce giants Nykaa and Zomato that were recently listed too, many investors have now been turned off from new offerings in the digital space.
  • But it’s not just household names like OYO, Zomato or Paytm that have had an off-year, according to market sources, companies like Pine Labs Pvt.,  Druva Inc., and InMobi Pte. in the United States had their IPOs affected too. Their IPOs have been postponed or delayed until the later part of this year or maybe even later.  
  • Druva is a software-as-a-service company located in Sunnyvale, California. Meanwhile, InMobi is a Singapore-based mobile solutions business, and fintech Pine Labs were all formed in India, and the majority of their activities are still based there. And while most of the spokespeople for these companies refuse to give any official comments, there are some comments available about having to monitor the industry conditions before taking any further steps about their public debut and future success. 

Conclusion 

This decline also leads to a discussion about the apparent decline in tech stocks in India and how many tech companies are looking to re-evaluate their financial goals and IPO calendars to be more in line with market sentiment and investor reactions. Their deliberate move to delay their listings could be an attempt to escape the trap of overvaluation due to hype and the surge in the last three years. 

Moreover, it is clear that the investors themselves seemed to have gotten over the initial mania of IPOs caused by the last three years of good returns, positive future predictions and the hopes of India’s startup landscape actually coming into its own in recent years. They are not looking to invest in just any upcoming IPO list due to the hype but actually looking to gain substantial profits. 

Related articles: 5 Tips for Investing In IPOs | What's the big deal about IPOs | Clearing the confusion from IPOs | IPO in India- The future looks bright | Upcoming IPO

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