The gap between private and public market valuations for startup IPOs has become increasingly visible, with Snapdeal parent AceVector listing nearly 12% below its IPO price despite strong demand. Valued at about ₹1,741 crore ($182 million) at the IPO price, a fraction of the $6.5-billion valuation commanded by Snapdeal in 2016, the debut underscored the growing disconnect between private-market expectations and public-market reality. According to Prime Database, of 10 new-age companies that have filed IPO papers with Sebi since September 2024 and remain in the pipeline, six are loss-making and four are profitable. The pattern suggests that public investors are becoming less willing to carry forward valuations built during the easy-money years without corresponding improvement in earnings.
Companies demonstrating profitability are commanding significantly higher valuations in the public market. Digital lender Fibe more than doubled profit to ₹257 crore in FY26 as revenue rose 31% to ₹1,585 crore and is reportedly targeting a valuation above $1 billion, against its latest private valuation of $648 million. Similarly, StockGro, which swung to a ₹35-crore profit in FY25 from a ₹101-crore loss, is also reportedly seeking a valuation above its latest $378-million private valuation. The contrast is stark with loss-making companies, as Razorpay's reported valuation expectations have fallen to $5-6 billion from its $7.5 billion December 2021 valuation when it was making a small profit, with some investors now valuing it at below $3 billion.
Several companies have opted to reset valuations before approaching public markets, recognizing the challenging IPO environment. Used-car retailer Spinny raised $170 million in February at a valuation of about $1.5 billion, down from $1.7 billion in March 2025 and $1.8 billion in December 2021. Its FY25 revenue rose 25% to ₹4,657 crore and loss narrowed to ₹424 crore, subsequently filing confidentially for an IPO of ₹2,500-3,000 crore. Zepto doubled revenue to ₹22,624 crore in FY26 but its net loss widened to ₹5,905 crore from ₹4,700 crore, prompting it to pause its IPO after domestic mutual funds were willing to value it at about $3 billion, below the $7-billion valuation of its October 2025 funding round. PhonePe's revenue rose 22% to ₹3,919 crore in six months to September 2025, but its net loss widened to ₹1,444 crore from ₹1,203 crore, with IPO valuation expectations falling from about $15 billion to $9-10.5 billion before the company put the offering on hold.
Investors who purchased this year's cheaply priced IPOs and held on have been well rewarded, especially when the money raised went to the company rather than exiting shareholders. According to Capitaline and Prime Database data, of the 38 mainboard issues listed between January and August with reported earnings, the 12 priced below 20 times earnings returned a median 45.4% by September 29, compared to 33% for all such issues. Most of these gains came after the debut, with shares opening at a median premium of only 5.3% and rising a median 35.2% from their listing-day close. Nine of the 12 issues raised mainly fresh capital and returned a median 51.3%. The trend continues with new-age companies now seeking to optimize their IPO proceeds for better returns, with at least four firms considering reallocating ₹500-700 crore from their primary issues.
The IPO market raised a record ₹94,205 crore through 78 mainboard issues in H1 FY27, but a larger share went to existing shareholders. According to Prime Database data, ₹55,695 crore (59%) came through offers for sale (OFS), while fresh issues accounted for ₹38,510 crore (41%). The shift was driven significantly by the ₹22,563-crore NSE IPO, which was entirely an OFS and accounted for nearly 24% of total H1 fundraising. Excluding NSE, the market raised about ₹71,642 crore, only 3% higher than H1 FY26's ₹69,533 crore. Fresh capital increased 6.4% year-on-year to ₹38,510 crore, with about 42% directed towards debt repayment.
