Info Edge founder Sanjeev Bikhchandani has said the market will continue to remain cautious of loss-making startups unless they show a clear visibility on profits.
Over the past three years there have been a series of lacklustre startup IPOs. Though there has been some improvement in recent times, analysts have questioned valuations and performance.
“After the market correction post 2022, while technically a loss-making company can go public, I am doubtful of how receptive public markets will be of them unless there is a clear visibility of profits for the next few years,” Bikchandani said during an analysts call.
“I am not sure if investors will be willing to give these firms the valuations they expect,” he added.
Having said that, the year 2023 saw a change in the investor sentiment towards the new-age tech companies, as many, including Zomato, Paytm and PB Fintech, managed to improve their bottom line and turned profitable.
“The rise in the share price of Zomato and PB Fintech is coinciding with improvement in their bottom line,” Bikhchandani said. InfoE dge is an investor in both firms.
The Zomato stock has surged over 200 percent over the past year, while PB Fintech surpassed its IPO price in January after two years of listing as it turned profitable in Q3.
Paytm’s recovery has been upended by the RBI’s recent curbs on its banking arm and the company is an existential battle.
While showing optimism around recovery in funding downturn, Bikhchandani said the capital squeeze would discipline startups as they become more frugal and conscious of unit economics.
“Having said that, some are unable to make a switch or pivot but are making an effort. Little shortage of capital is good for discipline. You will see the fruits of this in the next two years,” he said.
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