Recent reports from a leading consultant on internet company transactions in India indicate that over 30 tech start-ups with a combined valuation of around 100 billion USD are expected to make their public debut through initial public offerings (IPOs) by 2027. These events could significantly influence stock sales in the country and create new opportunities for investors.

The Current State of the IPO Market in India

India's market became the second largest in the world in terms of stock sales last year. However, it has since lost some of its appeal among investors. In this context, the anticipated return to active IPOs appears promising. Key companies preparing to enter the market include:

• The online retailer Flipkart, controlled by Walmart Inc.;

• The payment solutions provider PhonePe;

• The hotel booking service Oyo Hotels.

These companies are ready to leverage the growing interest in investments in tech start-ups, despite the recent decline in market activity.

Why Start-ups Are Ready for IPOs Now

According to Kashyap Chanchani, managing partner of Rainmaker, the current conditions in the market are markedly better than those in 2021 and 2022. During that period, many start-ups faced challenges post-listing due to overvaluation. For instance, shares of payment provider Paytm have fallen by approximately 63% since their IPO, whereas shares of cosmetics retailer Nykaa have decreased by 4%.

Currently, most companies have managed to strike a balance between rapid growth and profitability, which indicates more favorable conditions for market entry.

Key Factors for Successful IPOs

Preparing for an IPO requires companies to consider several key factors that can contribute to successful listings:

1. Financial Stability: Companies must demonstrate stable growth and control over their expenses.

2. Clear Business Model: A transparent and well-functioning business model can attract investor attention.

3. Strong Management Team: An experienced management team enhances confidence in the company.

4. Market Analysis: Conducting thorough analysis of current market conditions helps determine the best timing for an IPO.

5. Support from Major Investors: Strong backing from well-known investors can assist in capital raising.

Prospects for Investors

As the diversity of start-ups continues to grow, investors might find interest in several key segments that could become growth leaders in the coming years. Promising areas for investment include:

• Technology start-ups in the fintech sector;

• E-commerce platforms;

• Booking and accommodation services.

Indian start-ups have long established themselves as innovators, and their anticipated public listings may present unique value creation opportunities for both local and global investors.

Conclusion

The IPO market in India is on the brink of significant changes. The expected increase in the number of tech start-ups going public by 2027 could herald a new era for the Indian stock market. The success of these listings will depend on the companies' ability to adapt to changing conditions and provide investors with stable financial profiles.