The year 2024 marked a transformative period for Indian startups, with an impressive surge in initial public offerings (IPOs) redefining the market landscape. Thirteen new-age tech companies went public, collectively raising INR 29,070 Cr, signaling a significant shift in investor sentiment and market dynamics. This record-breaking year demonstrated the confluence of strong financials, right valuations, and strategic positioning.
A Record-Breaking Year for Startup IPOs
In a stark contrast to the previous year, where only five startups ventured into public markets, 2024 saw a sharp increase with 13 companies debuting on the stock exchanges. Of the INR 29,070 Cr raised, INR 18,770 Cr came through offers for sale (OFS), while INR 10,300 Cr was secured via fresh issues. This uptick mirrored the broader IPO momentum in India, with the total number of public listings rising by over 22%, from 243 in 2023 to 298 in 2024. Fundraising volumes soared, registering a 139% increase to INR 1.41 Lakh Cr compared to INR 58,827 Cr in the previous year.
Among the startups, 12 companies listed at a premium over their issue price, with only Ola Electric failing to achieve the same. Post-listing performance further highlighted the success of these IPOs, with TAC Infosec and Swiggy delivering returns of approximately 350% and 33%, respectively, by year-end. Together, 32 Indian tech stocks tracked by industry analysts closed 2024 with a combined market cap exceeding $100 Bn.
Driving Factors Behind the IPO Boom
- The resurgence of startup IPOs in 2024 harked back to the exuberance of 2021, when the market witnessed 10 blockbuster listings. Several key factors contributed to this renewed momentum:
- Investor Sentiment: A bullish run on Indian bourses, with benchmark indices Sensex and Nifty50 reaching record highs, fueled positive sentiment. Both institutional and retail investors embraced the opportunity to participate in these growth stories.
- Economic Resilience: India’s robust economic growth, coupled with an expanding middle and upper-middle class, enhanced investor confidence. A surge in demat accounts, which grew from 41 Mn in March 2020 to 171 Mn by August 2024, showcased a broadening retail investor base.
- Regulatory Support: The Securities and Exchange Board of India (SEBI) implemented measures to streamline the IPO process, improving transparency and instilling confidence in public markets.
Additionally, many startups realigned their business models to prioritize profitability, a shift prompted by the economic slowdown and funding winter of 2022. This focus on sustainable growth was critical in securing investor trust. Commenting on this trend, Divya Anand, partner at Stride Ventures, emphasized, “Profitability should be imminent. Startups must demonstrate the ability to control costs and deliver EBITDA-positive growth.”
Technology as a Growth Catalyst
The tech-driven nature of these companies was a key differentiator. From cloud-based solutions offered by TAC Security and Unicommerce to the scalability achieved by consumer-focused platforms like Swiggy and FirstCry, technology played a pivotal role in driving investor interest. Krishna Appala, a senior research analyst at Capitalmind Research, noted, “The success of tech IPOs globally has boosted confidence among Indian startups, highlighting their potential to scale and innovate.”
Smaller IPO Sizes Gain Traction
While larger IPOs like Swiggy (INR 11,324 Cr) and Ola Electric (INR 6,145 Cr) dominated headlines, the majority of listings in 2024 were smaller in size. Seven of the 13 IPOs were valued at less than INR 600 Cr, reflecting a strategic shift towards minimizing risks and improving accessibility for retail investors. Smaller IPOs also proved less susceptible to market volatility, making them attractive to both companies and investors.
Venture Capitalists Reap Rewards
For venture capitalists who had nurtured these startups through their early stages, 2024’s IPO boom offered significant returns. Prominent firms like Peak XV Partners, Accel, Matrix Partners, Tiger Global, and SoftBank reaped benefits, with some earning returns exceeding 30X from companies like Swiggy and BlackBuck.
What Lies Ahead in 2025?
The momentum from 2024 is expected to carry forward into 2025, with at least 23 startups, including Ather Energy and PhysicsWallah, planning public listings. These companies aim to raise over INR 55K Cr collectively, reflecting continued investor interest in tech-driven businesses. However, macroeconomic and geopolitical challenges could pose hurdles. Foreign institutional investors have shown signs of caution, and global factors, including the return of Donald Trump to the US presidency, could influence market dynamics.
The upcoming Union Budget in February 2025 will also be critical in shaping investor sentiment. Despite potential challenges, the Indian IPO landscape remains promising, with startups well-positioned to capitalize on growing market opportunities. As the public market evolves, 2025 could further solidify India’s status as a global hub for tech-driven IPOs.
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