Despite pitching high growth models to investors, startup companies are encountering significant resistance in the IPO market. According to reports from The Times of India, investors are becoming increasingly selective on valuation fronts, creating challenges for companies like Zepto which had been targeting a $10 billion valuation. The company had also attempted to raise funds at around $8-9 billion valuation but has not been successful so far, as reported by bankers familiar with the matter.
The competitive landscape for startup IPOs is expected to become more challenging with upcoming mega listings. As reported by The Times of India, if NSE and Jio Platforms listings hit the market this year following stabilization after recent West Asia tensions, there will be increased competition for investor attention. Keyur Majumdar, managing partner & CIO-AIF at Bay Capital, noted that these mega listings are likely to see good investor interest and significant capital deployment, making larger investors more selective about valuation asks from companies.
Startup valuations are increasingly tied to their financial metrics, creating additional scrutiny for potential IPO candidates. According to The Times of India, Ola Electric, which listed with a market capitalization of nearly $4.8 billion in 2024, is currently struggling with its stock price over 40% down from its 52-week high of ₹71.2 and has seen its market cap halve since listing. This performance highlights the volatility that investors face when valuing loss-making companies.
Zepto, currently valued at $7 billion, is preparing for a listing with ₹5,905 crore in losses as of FY26. As reported by The Times of India, the competitive landscape for Zepto has changed significantly with Amazon and Flipkart entering the quick commerce space. Rajat Rajgarhia, CEO of institutional equities at Motilal Oswal, noted that investors are more selective about firms with growth models and reasonable valuations, creating additional hurdles for the company's public offering plans.
The IPO market faces additional uncertainty due to geopolitical developments. According to The Times of India, Prashant Singhal, partner and leader at EY India, warned that if the current Gulf region unrest isn't resolved within the next 4-6 weeks, it could significantly impact the IPO market, making this year challenging for new listings. Bankers had been hoping for a busy IPO calendar in the second half of the year, but the recent geopolitical tensions have created additional market volatility that could affect investor confidence in startup offerings.
