A US$18b wipe-out is harsh reality of five famed India IPOs

FIVE of the most-hyped technology initial public offerings (IPO) in India over the past 16 months have floundered since listing, shedding more than US$18 billion in value.

Concerns over valuations and rising global rates have taken the biggest toll on the parent of payments firm Paytm. The other victims include delivery startup Zomato, the owner of beauty e-retailer Nykaa, logistics firm Delhivery and the operator of online insurance marketplace Policybazaar.

Indian IPOs raised a record US$18 billion in 2021 on government efforts to foster startups combined with easy-money policy and a surge in retail trading during the pandemic. But investors have since dumped high-profile tech shares, even as the broader Indian stock market has outperformed global peers and scaled new peaks.

“Valuations of these companies were not supported by fundamentals and the balance sheets, and their cash burn was high,” said Arun Malhotra, a portfolio manager with CapGrow Capital Advisors LLP. As large investors curtail their holdings, unlocked shares are adding to supply and this is accelerating the price declines, he said.

Paytm parent One 97 Communications plunged as much as 10 per cent on Thursday after early investor SoftBank Group lowered its stake following the end of its IPO lock-up period. Uber Technologies, an early investor in Zomato, similarly exited the online food-delivery firm in August.

“New investors should not bottom fish in these stocks if the company has no clear path to profitability,” said Abhay Agarwal, a fund manager at Piper Serica Advisors. BLOOMBERG