Why are Indian Startups Choosing the IPO Path?

July 23, 2021, marked a watershed moment in the Indian startup ecosystem. On this day, Zomato, the food delivery major has become the first among the bunch to be a publicly-traded company in India. On its debut day, the company became one of the 50 most valued public companies in India.

After Zomato, a long list of Indian startup unicorns is preparing to follow Zomato’s footsteps. Flipkart, Paytm, Nykaa, Delhivery, Freshworks, Lenskart are all in the advanced stages of going public.

While most of the world is still facing the heat of a pandemic, Why are so many Indian startups going public? This is one of the most asked questions in the Indian business circles nowadays.

There are many factors that contributed to the decision of these companies to go public. From newfound liquidity, record retail participation, and pandemic fueled going online drive are playing the most crucial role in the new age IPOs.

RBI Worked Around

Since the start of the pandemic, the Reserve Bank of India has worked round the clock to increase the supply of money in India.

A huge chunk of the new money pumped into the circulation has found its way to the capital markets. This led to a historic bull run in the securities market. Indian startups want to take advantage of the easily available capital.

The pandemic also saw a boom in retail participation in the capital markets. A record number of new investors and traders have entered the market. Most of these new participants belong to the millennial generation, the biggest group of users for these new-age internet companies. Indian startups want to take advantage of this new group of investors.

Pandemic Pumped Business

The pandemic has also brought more people online. From groceries to food, medicine to entertainment, everything is going online at a rapid pace. The biggest beneficiaries are the Indian startups. With their unit economics improving, these startups see this as the perfect time to go public.

The IPO of Infosys marked a new beginning in the Indian capital markets. Infosys opened the way for a series of IT and ITeS IPOs in India. Experts and analysts are drawing a comparison between the IPO of Infosys and Zomato. Like them, we are also hopeful to see a new IPO boom in the country.


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