India has potential for 80 IPOs in 5 years: Redseer Report

The country may see over 100 large-scale profitable/path-to-profitability startups by 2027, out of which 20 are already being listed

December 14, 2022

India has about US$ 3.9 trillion worth of market capitalisation

1% of that market cap can be attributed to tech/new-age companies

As startups make more profits, they start eyeing the public market

India’s Information Technology (IT) outsourcing market is projected to reach US$ 587.3 billion by 2027

India may see over 100 large-scale profitable/path-to-profitability startups by 2027, out of which 20 are already being listed, while 80 startups have the potential to announce an Initial Public Offering (IPO), according to a report from Redseer.

According to the report, India has about US$ 3.9 trillion worth of market capitalisation, of which 1% can be attributed to tech/new-age companies. Experts said that as startups are making more profits, they start eyeing the public market. 

Media reports said that the stock performances of tech IPOs compared to other consumer companies have gone down because of the global macro situation, as profits are currently a lot more valuable. Additionally, tech companies have now prioritised growth.

The media reports also said that companies which turn cash-flow positive two years from 2022 would see a reduction of at least 20-30% of their valuations in a low-interest rate situation, which increases by quite a bit in a high-interest rate situation, which is the current scene.

Experts said that even after the interest rates have declined, it will take some time for the markets to come back sustainably. They are expected to recover in the next few quarters. 

The Redseer report also pointed out that startups will need to focus on several metrics as they embark on their IPO journey. These include market leadership, clearly visible TAM (total addressable market), predictable revenues, high operating leverage, achieved sustainable unit economics and a clear path to profitability.

India has the third largest start-up ecosystem in the world and with so many tech IPOs predicted in the future, the startup industry is all set on an onward growth trajectory.

Source: Hindu BusinessLine

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