IPO wave surges as start-ups flood public markets
India’s start-up ecosystem is turning its gaze from private funding to public markets in a big way. In fiscal year 2025, start-ups secured more than ₹44,000 crore (~US $5.3 billion) from IPOs, FPOs and other public-market routes — overtaking late-stage private investments for the first time. “The listing boom is allowing early backers to cash out, signalling a maturation of the Indian start-up exit story,” noted a recent analysis.
Blockbuster listings and standout performances
Several high-profile listings highlight the momentum. For example:
- Pine Labs soared nearly 29% on its debut, valuing the payments-firm at around ₹32,000 crore (US $3.6 billion).
- Lenskart Solutions drew bids worth over ₹1 lakh crore (~US $12 billion) despite some analysts flagging lofty valuations.
But the valuation clouds are gathering
Despite the enthusiasm, several red-flags are emerging:
- Lenskart’s debut raised concerns as it listed at a valuation of US $7.7 billion, translating to a price-to-earnings ratio around 238:1 — high even for growth stocks.
- Some upcoming IPOs, like National Securities Depository Limited (NSDL), set price bands significantly below prior unlisted valuations — a reminder that hype may not always translate to elevated pricing.
- Analysts warn of “anchoring bias” — investors chasing the big listing pops and overlooking fundamentals.
What’s driving both boom and caution
Drivers:
- Deep domestic liquidity, rising retail participation, and a rebound in investor confidence in Indian equities.
- A shift in funding dynamics: public exit routes are becoming more accessible, encouraging more late-stage start-ups to opt for IPOs.
Caution factors:
- Many start-ups remain loss-making or modestly profitable, raising questions about the ability to justify steep valuations.
- Valuation gaps between private rounds and public pricing have narrowed, reducing the margin for “listing pop.”
- With so much supply of IPOs, investor appetite could start to fatigue if performance doesn’t match expectations.
Implications for investors and start-ups
For investors: It means more choice — but also the need for sharper due diligence. Listing momentum may tempt many, but when valuations are stretched, risk rises.
For start-ups: The public markets offer access to capital, visibility and liquidity, but also greater scrutiny and pressure to deliver results. Some founders may need to reframe their growth narratives from “hockey-stick scaling” to sustainable business models.
What to watch next
- How upcoming large-cap start-ups perform in their first 12–18 months post-listing: will they meet growth and profitability targets, or disappoint and drag sentiment?
- Whether the regulator (Securities and Exchange Board of India) tightens norms on IPO pricing, disclosures or performance thresholds.
- The behaviour of retail vs institutional flows: if retail exuberance wanes, listing gains may moderate.
- The potential for a correction: any broad pull-back in Indian equities could undermine newly listed start-ups with flamboyant valuations.
Final word
India’s start-up-to-public-market shift is unmistakable and significant. The listing wave signals both confidence and change in the ecosystem. But beneath the excitement lies a dual reality: while many firms will headline the next chapter of India’s growth, others may find the public market demands a reality check. Valuations are high — time will tell if the fundamentals are high enough to match.
