Is India's Startup IPO Madness Over | Motilal Oswal

Is the Startup IPO Craze Over in India

India was in the throes of a boom in IPOs (initial public offerings) in the sector of technology recently. However, the trend has come to a virtual grinding halt as the most touted startups saw failure almost as soon as they were listed on exchanges. With these IPOs coming out, market euphoria was evident, and the IPO was set to be the new way to invest for many newbies and experienced investors alike. Now, the mood has dulled somewhat, even in the wake of the giant IPO potentially becoming listed soon. 

The Silence After the Storm

With an IPO, many investors view a good way to allocate funds and diversify portfolios. When you open a Demat account for the first time, IPO investment may well be on your agenda of the first thing to do. Prominent technology startups like Oyo Hotels and the new logistics expert, Delhivery, are holding back on their debuts for the public for the time being. After the startup IPO fiasco of so-called ‘success stories’, these private companies are reappraising their target valuation ratios and reassessing their public offering potential. Both Oyo Hotels and Delhivery are backed by the huge SoftBank Group Corp., and so, they were, not too long ago, among India’s highly awaited public offerings. 

Investors Take a Backseat

The ecosystem of startups in India has faced some kind of a reckoning as any company considering a startup IPO has to rethink its whole agenda. The news of earlier promising startups tanking is not encouraging to these companies who once thought they would do well with their own IPOs. To add to this pessimistic mood, investors have chosen to pull back and are not as enthusiastic about startups as they once were. 2021 was somewhat of a record for startups, only for it to end in an anti-climax. Moreover, regulators have started to scrutinise candidates coming up with future IPOs quite rigorously, and hence, there are even more delays in listings and offerings. 

The General Consensus

Once totally enamoured by most startups with big names, investors are realising that the path to real growth and returns is not hype but historical data of any company. Companies need to be studied vehemently to know about their growth potential, even for startups. With such a sentiment around IPO investment, it is no wonder that corporations like Delhivery have stalled its impressive $1 billion initial public offering to the April-commencing fiscal year (2022). Company insiders have stated this, but there is no evidence in sight of an IPO from the company anytime soon. The news is that companies like Delhivery are still in the process of evaluating its plan for listing and this may take a while. In the case of Oyo Hotels, the startup came under some flak as it displayed hefty losses when it filed its preliminary documentation for its IPO last year. Therefore, all is not well on the startup-IPO front. 

Investments

Whether you plan to invest in an IPO or any other securities, the first thing to do is to open a Demat account with a prominent broker like Motilal Oswal. The current mood in the IPO segment should not put you off IPO investment, but on the other hand, with a good broker, you can do your research of a company and then invest wisely. 

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