Startups bring IPOs back on table as markets rebound

MUMBAI: After a lull lasting 4-5 months, the IPO window may be opening up for startups and a broader set of companies amid a bounce back in local markets and relative easing of global geopolitical tensions. Firms have begun active discussions on listings and are expediting IPO filings to make most of the time, investment bankers told TOI.

Startups are even feeling more confident in terms of setting valuation expectations, after a clutch of firms like Ather Energy readjusted their issue size and valuations to get more investor participation amid a weak market. Over 80 companies are at different stages of approval for IPOs, about a fourth of which are in new age sectors, according to data shared by IIFL Capital.

"With the recent ceasefire and signs of progress between the US and China on tariffs, the (market) tone has become more constructive. That's reflected in the strength of last week's block deals, which were well absorbed by the market. We are also seeing companies look at primary issuance more actively to take advantage of the current window," said Kailash Soni, head of India equity capital markets (ECM) at Goldman Sachs. Not to say that there will be a flurry of IPOs immediately given that it takes longer to launch IPOs but the momentum is back.

"The stability we are now seeing has certainly renewed interest-we expect to see meaningful activity in the second half of the (calendar) year particularly from companies that had previously put plans on hold," Soni added. The sensex, from an all-time high of nearly 86K mark in late Sept 2024, had lost nearly 15% to 73K by early April this year. Since then it has gained, accompanied by intermittent spells of high volatility, to around 82K level now, down just about 4% from its lifetime high level nearly eight months ago. Companies like LG Electronics' India arm had paused IPO plans amid market volatility.

Zepto, PineLabs, Lenskart, Groww and PhonePe are among startups that are preparing for IPO while some like Urban Company and PhysicsWallah have already filed their draft IPO papers with SEBI.

"A lot of new age companies are accelerating the filing of DRHPs. If the markets remain stable, we will see more new age firms launching IPOs this year compared to traditional companies. The markets now are in a risk on mode," said Gaurav Sood, managing director and head, ECM at Avendus Capital.


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