Some have also had to resort to accepting lower, or stagnant valuations in subsequent fundraising rounds. Even the startups that did manage a listing — often at eye-watering valuations, have been struggling — as are many of their shareholders.
Zomato, for instance, which kicked off the trend of new-age IPOs in July 2021, has lost Rs 50,000 crore in market cap from the high hit on listing day. Shares of other new-age listings like PayTM, PB FinTech, Nykaa and Delhivery have also taken a beating on the bourses — a few correcting up to 60 percent from their IPO price. While some counters have recovered substantially from their all-time lows, they're still a long way from their IPO price.
But experts say this kind of pain will not last forever.
"I think we will see some turnaround and it is perfectly fine for companies to take the medicine and keep moving forward. So, maybe another 9-12 months is my personal guess," Hemant Taneja of General Catalyst told CNBC-TV18, adding that valuations have now become more normalised and that the IPO market will open once interest rates stabilise.
"While rates may not go up much more, they are likely to remain at this level or around this level for at least a year-year-and-a-half more, at least in the US. So, a company that is going to be bleeding a lot for a lot longer — they must move and evaluate the chances of survival. this may affect more the private sector than the publicly listed companies, but that is how the landscape is right now," according to Deepak Shenoy of Capital Mind.
Sanjeev Bikhchandani of Info Edge also told CNBC-TV18 earlier this month that there are more concerns over profitability and customer loyalty and that his advice to the private portfolio would be to turn profitable before listing.
Although there's doubt whether that earlier exuberance — and the propensity to put profitability second to growth — will return to what it used to be.
So investors may have to wait a while for the next new-age IPO that commands a staggering valuation.
