InfoEdge Sanjeev Bikhchandani and MakeMyTrip Deep Kalra on their IPO journey, and what has changed

But over the last decade and a half, things have changed. “The Indian internet economy has come of age and it has been coming a while. And COVID-19, like it or not, has accelerated this change,” said Kalra.

According to him, “A lot of companies have achieved IPO-able scale, have repeatability, and there is a lot of money out there. It is a great time to go public.”

Bikhchandani concurs. Many of the companies that are prepping for IPOs like Policybazar and Zomato were started between 2008 and 2010 and are maturing. “Seeds were sown 10-12 years ago and they are coming of age,” he added.

However, the decision to go public and where to go is still the tough nut to crack even when listing more than a decade ago. Bikhchandani chose to list in the Indian stock exchanges, whereas Kalra chose the US’ NASDAQ.

It all boils down to individual preference and what they think would work for the company. For Kalra, while listing in the US is onerous, the market had better understanding of MakeMyTrip’s model since it saw similar companies listed then. It was what tilted the balance for Kalra.

“The US regulators are stricter and more compliance is needed, but they know internet IPOs pretty well. We were not sure Indian investors got our model. I took a lot of comfort from the fact that US already had 3-4 listed travel companies,” he added.

Additionally, NASDAQ gives better valuation than listing in India and also for companies that are not profitable, the US is a better option to go public.

Bikhchandani reasoned that while the valuation is better, the brand that was built is lesser-known in the US and that is a challenge. “Also, in general it is a lot less complicated to go public in India,” he added.

The IPO journey does not end with just choosing where to list. Companies also need to educate the employees, especially the ones with authority on insider trading, and getting your systems IPO ready.

Bikhchandani recounted that he had to hire a second line of finance professionals for the IPO. The company also had to move to an industry standard billing system for subscriptions instead of the in-house product right before the IPO to ensure that the company is not manipulating the numbers. “That took us a year,” he shared.

Pricing is the next big dilemma. “It is a tough one,” says Bikhchandani. It is also tough call to price the IPO because you don’t want to undervalue your stock or put a high price and not have any takers. “What you don’t want is your IPO to fail,” he adds. So when InfoEdge went public, at Rs 320, it was conservative in its pricing.

The stock is now valued at Rs 4,624. “But I don’t have any regrets. Even during the global financial meltdown more than a decade back, we were well above the IPO price even as stock prices went down from Rs 1,400 to Rs 376,” he said.

MakeMyTrip’s IPO price was $14. Kalra explained that they chose to remain conservative despite the flexibility to increase the IPO price offered in the US stock exchange. Give a chance, Kalra said, they would have upped the price as the stock ended with a price of $27 the same day.

But at the end of the day, IPO is a great financial milestone for the companies. “When we went public in 2010, close to 70 percent of the team had stock,” Kalra said.

These employees used the money to buy house, or save it for their children’s future. “For me, my employees making money was a great feeling. I love my investors a lot but they will make money on one deal or the other. It doesn't make a difference,” he said.