2 days ago
Startup IPOs Face Sharper Public-Market Profitability Test
A company’s IPO is when it sells shares to the public for the first time.
AceVector’s shares began trading below the price offered to IPO buyers, even though many people had applied.
This is one sign that public investors are looking more carefully at what startups are worth.
Many startups hoping to go public are still losing money.
Some have lowered their expected values or postponed their IPOs.
Companies that are making profits or improving their losses may have an easier time asking for higher values.
But even profitable companies may be worth less than they were during the investment boom of 2021.
Investors are judging each company more closely on its results.
AceVector, Snapdeal’s parent, listed nearly 12% below its IPO price despite its issue being subscribed almost five times.
Among 10 newer companies with IPO filings pending since September 2024, six are loss-making and four are profitable.
Loss-making firms including Razorpay, Zepto and PhonePe have faced lower valuation expectations, and some have delayed or paused IPO plans.
Profitable companies such as Kuku FM and Fibe are reportedly seeking valuations above their latest private-round levels.
Investors are differentiating among startups based on earnings and financial progress, rather than uniformly rejecting loss-making businesses.
- Who
- AceVector and other Indian startups planning or considering IPOs, along with public-market investors.
- What
- Startup IPOs are facing closer scrutiny of profitability, with some companies lowering valuation expectations or delaying listings.
- Where
- India’s stock markets and startup IPO pipeline.
- When
- AceVector listed on Monday; the article describes IPO filings since September 2024 and company financial results through FY26.
- Why
- Public investors are less willing to accept private-market valuations without evidence of improving earnings.
Public-market caution
Startup valuation expectations
Valuations for loss-making firms
Public-market caution
Public-market investors are placing more weight on earnings and have indicated lower valuations for some loss-making startups.
Startup valuation expectations
Some startups continue to seek substantial valuations, while others have raised new private funding or adjusted plans rather than abandon their IPO ambitions.
Value of profitability
Public-market caution
Profitability does not restore peak private-market valuations automatically; Oyo’s reported target remains below its 2021 valuation.
Startup valuation expectations
Companies showing profits or improved financial performance, including Kuku FM and Fibe, are reportedly seeking higher valuations than in their latest private rounds.
Key facts
- AceVector debut
- Listed nearly 12% below its IPO price, although the issue was subscribed almost five times.
- IPO pipeline
- Of 10 new-age companies with IPO papers filed with Sebi since September 2024 and still in the pipeline, six were loss-making and four profitable.
- AceVector IPO valuation
- About Rs 1,741 crore ($182 million) at the IPO price, compared with Snapdeal’s $6.5-billion valuation in 2016.
- Razorpay
- FY25 net loss widened to Rs 1,206 crore while revenue grew 60% to Rs 3,932 crore; reported valuation expectations fell to $5-6 billion.
- Zepto
- FY26 revenue doubled to Rs 22,624 crore, while its net loss widened to Rs 5,905 crore; it paused its IPO after mutual funds indicated a valuation of about $3 billion.
- PhonePe
- Put its IPO on hold after reported valuation expectations fell from about $15 billion to $9-10.5 billion.
- Kuku FM
- Reportedly moved from a Rs 153-crore net loss to a Rs 183-crore net profit in FY26, and is targeting a valuation of about $1.8 billion.
- Oyo
- Reportedly targeting $7-8 billion after becoming profitable, below its 2021 valuation of about $11.2 billion.
Sources
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