More than three dozen tech startups with a combined valuation of $100 billion are set to go public by 2027 in what would mark a rebound in stock sales in India, according to one of the country’s top deal advisers to internet companies.

Walmart Inc.-controlled online retailer Flipkart, payments firm PhonePe and lodging provider Oyo Hotels are among the companies seeking to list in the country, which was the world’s second-largest market for share sales last year but has lost steam since. Most companies preparing for an initial public offering have been able to strike a balance between speedy growth and profitability, according to a report by the homegrown investment bank The Rainmaker Group.

Young companies are now in better shape than in 2021 and 2022, when several startups that sought to capture India’s booming capital markets cratered after listing at high valuations, said Kashyap Chanchani, managing partner at Rainmaker. Payment provider Paytm has dropped about 63% since its IPO while beauty retailer Nykaa is down 4%.

“The financial health of the startups due to list in the next two years is materially better than the companies that listed previously,” Chanchani, who helped Indian startups raise $1 billion in equity last year, said in an interview. “Two-thirds of these firms are already profitable, and they are also doing a better job with transparency.

Rainmaker’s clients have included Oyo and e-commerce startup Swiggy, and the firm typically receives a cut of the fundraising deals it helps to arrange. It doesn’t advise companies on IPOs.

The number of share sales in India dropped by 34% in the first quarter as the stock market sputtered. The benchmark NSE Nifty 50 Index had risen for nine consecutive years, but it started declining in late September amid an unexpected slowdown in economic growth and a slew of analysts downgraded their expectations for corporate earnings.

First-quarter proceeds from IPOs, block sales and share placements in India nearly halved to $7.1 billion, slipping below those of Hong Kong and Japan.

Still, Chanchani is among bankers predicting that deals in India will pick up in the coming months, when several sales are expected to hit the market. Those include LG Electronics Inc.’s Indian unit, which may raise as much as $1.7 billion, and electric-scooter maker Ather Energy Pvt., which could raise about $400 million.

A new surge in startup IPOs would provide a much-needed exit to large investors such as SoftBank Group Corp. and Prosus NV. Billionaire Masayoshi Son’s SoftBank Vision Fund is a shareholder in companies such as Oyo, optician Lenskart Solutions Pvt., and used-car seller CARS24 Solutions Pvt., while Prosus is an investor in e-commerce firm Meesho and home services startup Urban Company.

Firms like SoftBank and Prosus “have a dozen companies or so where they are sitting on massive gains, and several of these firms have begun seeking the public markets route,” Chanchani said, cautioning though that IPOs will have to be priced carefully as retail investors will reject lofty valuations.

Companies going public will have to assuage investor concerns about a slowing economy and earnings growth. Some of India’s newly listed stocks have also declined after sales restrictions expired, adding pressure to a stock market already down hundreds of billions of dollars since late last year.

India’s startup economy remains among the biggest in the world after the US and China. Still, it’s also one that’s seen major corporate governance lapses, sinking valuations and profits turning to dust. Many young firms have been forced to cut jobs and growth plans, while others have imploded. Teacher-turned-entrepreneur Byju Raveendran’s eponymous online tutoring business illustrates how a once high-flying company can run aground as investors lose faith in founders once-labeled charismatic.

“One of the key questions that investors ask us often is — can we trust the founders?” Chanchani said. (NDTV)

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The Centre’s schemes like Production-Linked Incentive (PLI) are creating huge momentum in the manufacturing sector not only in India but among global companies entering the country, according to Sunil Mittal, Founder and Chairperson of Bharti Enterprises Ltd.

“Our government is pushing manufacturing. The PLI scheme is creating tremendous momentum in not only India but also in global corporations coming to India for manufacturing… in this term of the government, you will see semiconductors becoming a reality,” Mittal said on the sidelines of the NDTV World Summit 2024 on Monday.

Mittal, Chairperson of Bharti Enterprises, emphasized the global expansion of Indian businesses and the country’s rising economic influence during his address at the Summit.

Highlighting the efforts to take Indian brands to the global stage he praised the country’s growing capabilities in manufacturing and exports.

Electronics, hardware manufacturing and software are some of the strongholds that India has in terms of manufacturing, he said.

“We have to showcase the Indian culture, the Indian ethos, India’s commitment, and that’s what I am currently focused on–expanding Airtel and all Bharti Enterprises into global markets. We need to take India to the globe,” said Mittal, underlining his company’s mission to grow internationally.

He noted that India has evolved into a place where products are produced and consumed locally, with increasing export potential worldwide.

Mittal praised companies like Tata for leading the way in global expansion, especially in Europe and South Africa, and shared Airtel’s journey of becoming a prominent Indian brand abroad.

“In 2010, we made an audacious move to enter 15 countries in Africa. Today, we operate in 14 sub-Saharan countries, along with Sri Lanka and Bangladesh,” he stated, highlighting Airtel’s presence across the continent and its nearly 160 million customers in these regions.

He said, “We knew if you wanted our next 100 million customers we had to go somewhere outside to place like Africa today we have nearly 160 million customers in these 14 countries and the population and the young people are adopting technologies.”

According to Mittal, India’s investments are being more warmly welcomed globally compared to other nations like China, which faces increasing scrutiny.

“Indian money is welcomed abroad, unlike our neighbouring country, China, whose investments are often blocked. Even funds from the Middle East face stronger filters due to their sovereign backing,” he said.

Noting the growing number of Indian companies venturing overseas, he said, “You are seeing GMR building airport outside, you are seeing Adani now going to Kenya, Godrej is going overseas Bajaj going outside. Hero Motor going outside. You are starting to see the emergence of global companies slowly but surely out of India now.”

Looking ahead, Mittal expressed optimism about India’s demographic dividend, he said, “In 2030, India will have 1 billion people in the working age, which means great opportunities, tremendous amount of consumption, equally tremendous amount of savings. But these people need to get jobs.”

He added, “There some other sector service industry tourism, our new e-commerce type of activity will also generate a lot of jobs but in the end for any nation to become true economic power you need manufacturing. and I’m so glad that finally is getting this manufacturing piece right.”

Emphasising the importance of building digital infrastructure to support this growth, he said, “My company spent between Rs 30,000 crores-Rs 35,000 crores in a year on digital infrastructure creation.” (ANI)

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