In the imminent resurgence of Indian startups in the public markets, Kotak Investment Banking foresees a notable wave of initial public offerings (IPOs), with approximately 15 to 20 startup unicorns gearing up for public listings within the next 12 to 24 months.
After a period of hesitation triggered by a global tech slowdown and turbulent markets, emerging companies are now poised to embrace the public markets once again. Notably, Ola Electric, FirstCry, and MobiKwik have already taken steps in this direction by filing draft IPO papers with the Securities and Exchange Board of India (SEBI), positioning themselves as frontrunners for listings on stock exchanges later this year.
Kotak Investment Banking's senior officials project the conclusion of the funding winter for startups by 2024, attributing this optimistic outlook to the revival of dynamism in the public markets. V Jayasankar, Managing Director and board member at Kotak Investment Banking, highlighted that substantial internet IPOs will act as catalysts, sparking a resurgence in comprehensive deal-making across the startup landscape.
The recent challenges faced by startups, marked by a funding crunch resulting in a significant decline in investments to $8.2 billion in 2023 from the previous year's $25 billion, are expected to be alleviated by the shifting investment narrative. Startups are now focusing on achieving profitable growth, a departure from the earlier emphasis on growth at any cost. Notably, sectors such as used car platforms are predicted to become highly profitable in the next one to two years, while quick commerce, B2B commerce, and omni-channel e-tail segments are currently in robust financial positions.
Acknowledging the evolution of startup strategies towards profitability, Jayasankar emphasized that companies, including IPO-bound entities like MobiKwik and Oyo, have reported profitable quarters in the fiscal year 2024. Kotak estimates that India will witness over 10 internet decacorns, startups with valuations exceeding $10 billion, by the close of 2025.
