A tech company that usually prioritises growth over profits has seen a stronger drop in post-IPO valuations, compared to traditional IPOs that see a milder drop, if any, due to a firmer grip on profitability metrics, it said.
Therefore, combined with the macro situation, profits are now much more valuable in the current situation.
As a result, Zomato and Paytm have renewed their focus on profitability after listing. In turn, startups such as Oyo have refiled earnings to reflect stronger growth and are paying more attention to profitability instead of valuations.
What will help more startups is that their share in India’s public markets is minuscule.
About 25% of the $43 trillion in market capitalisation in the U.S. can be attributed to technology and new-age companies, according to Redseer. This includes giants like Apple, Amazon, etc. In India, with about $3.9 trillion market capitalisation, only about 1% can be attributed to tech and new-age companies, according to Agarwal.
“We are just getting started with the journey of start-ups coming up and going towards their path to profitability, then looking at that public market journey,” Agarwal said.