WILL PAYTM'S IPO DEBACLE AFFECT UPCOMING STARTUP IPOs?

MOBIKWIK MAY REPORTEDLY DELAY ITS IPO BY A FEW MONTHS BECAUSE OF A LACK OF DEMAND FROM INVESTORS AND A 30-40 PERCENT DECLINE IN VALUATION

- S. Shanthi

India’s Startup Ecosystem was brimming with positive news for the last few months. While some companies grabbed huge funding rounds, many turned unicorns and a few others made a successful IPO debut. And, almost all of them were on a hiring spree. This golden phase, however, hit a bump on November 18, when Paytm's shares fell 27 per cent on debut. On November 22, shares dropped further by over 17.78 per cent at 12 pm. They closed at INR 1,360, 37 per cent below the issue price of INR 2,150. The share price, however, recovered on November 23 and closed at INR 1,489.80 on NSE. This unexpected turn of events has now given rise to the debate of whether it will have an impact on the upcoming IPOs of companies including Life Insurance Corporation of India, MobiKwik, OYO, among others. According to a news report, MobiKwik might delay its IPO by a few months because of a lack of demand from investors along with a 30-40 per cent decline in valuation.

Some market analysts Entrepreneur India spoke to believe that markets are driven by sentiments and this will affect the upcoming IPOs, few others believe it will not make a huge difference, while almost all of them opine that this is a lesson for other startups rushing towards the IPO milestone. “The impact will be negative as investors will be cautious about what kind of valuations these IPOs are coming at. Of course, it will not affect the entire space. Companies that are coming with a strong growth rate, companies with reasonable valuations as compared to global players, companies that are already at profit or have visibility for profit in the near term will not be impacted,” said Karan Taurani, senior vice president, Elara Capital.