Startups like OYO, Pepperfry who have earlier shelved plans of IPO because of market volatility have now started reviving plans to list in early 2023.
Analysts have also predicted revival of the market sentiment by early 2023. Investment advisory firm Avendus told BusinessLine that companies are in a state of readiness for opportune windows to file for IPO early next year. Bank of America analysts have also recently said that they expect IPOs in India to regain momentum in the Q1 of 2023.
Gaurav Sood, Executive Director and Head, Equity Capital Markets at Avendus said, “We believe some of the sentiment from secondaries will get translated to the IPO market and there could be a revival to a certain extent in early 2023. This will be on the expectation that central banks globally will soften their aggressive stance on raising interest rates and inflationary pressures start subsiding globally.”
Plans on hold
He added that given the volatility and the high interest rates prevailing in the markets, a few start-ups are evaluating favourable timelines to go public. The debate is mostly around getting the right valuations from investors and showing a path to profitability in the medium term.
Multiple high growth startups like Byju’s, OYO, Ola, Pepperfry, Pharmeasy, MobiKwiK, Ixigo had put IPO plans on hold because of the ongoing market downturn in 2022. Sood also noted that many growth tech companies have started incorporating the feedback from their recently listed peers.
“Startups are now engaging with public investors 12-24 months prior to going public to understand market expectations much better and incorporate some of this feedback to be well prepared at the time of the IPO,” he added
Focus on profitability
Majority of IPO-bound companies have turned focus on turning profitable and showing clear path to profitability. In a recent interview, Byju’s CEO Byju Raveendran told BusinessLine that the edtech unicorn is aiming to become cashflow positive in a few quarters. In July, talking about shutting down Ola Dash and Ola Cars vertical, Ola also said, “As we continue to grow, we will look at leaner and consolidated teams and capabilities and scale in a manner that keeps our strong profitability intact.”