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Time of India
9 hours ago
- Business
- Time of India
Startups chase profits, their ticket to Dalal Street
MUMBAI: Startups gearing up to go public are setting their financials in order - cutting losses and chasing profitability. IPO-bound Urban Company reported its first full year of profitability in FY25, the firm said in its annual report last week. Although much of the profits - Rs 240 crore on a consolidated basis - came on the back of a Rs 211-crore deferred tax credit, the startup managed to turn in profits even on a pre-tax basis. Hit by the tech downturn post pandemic that saw valuations of loss-making startups getting eroded in private market and investor narrative shifting from growth at any cost to profits - companies had already begun fixing their financials; those eyeing an IPO had been more focused given the affinity of public markets for profitable firms and the added scrutiny they bring forth. The trend is not new but in the current times, companies may have to do more than just paring losses. In a volatile market situation, the bar for IPOs is much higher and it is imperative for companies to be profitable, analysts said. "The revenue metrics are no longer benchmarks from a (IPO) valuation perspective. For even the anchor book to come in, profitability is important. Ebitda level profitability is also fine but investors will not favour companies that burn cash," Mehekka Oberoi, fund manager at IIFL Fintech Fund told TOI. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Eat 1 Teaspoon Every Night, See What Happens A Week Later [Video] Health Benefits Undo Given that there are some listed startups today, the benchmarks for companies now going IPO are higher and profitability has become more important, said Gopal Jain, managing partner at Gaja Capital. "There is less space for vanity metrics in public markets. Because they cater to all kind of investors, they focus on simple metrics like profitability." "Also, public markets show leniency when new sectors are born, as the sectors become deeper, the bar for subsequent companies go up," Jain said. Urban Company now joins the league of players like Groww which are profitable; Oyo which is making its third attempt in going public is also in the black. Meesho and Lenskart heavily cut down on their losses in FY24, their latest filings show; analysts do not rule out more companies reporting profitability for FY25. Meesho's consolidated losses narrowed to Rs 304 crore in FY24 from Rs 1,675 crore in FY23. The company had earlier this year said that excluding Esop costs, its losses stood at Rs 53 crore in FY24 and it managed to turn profitable in Q2FY24. Lenskart's consolidated losses narrowed to Rs 10 crore in FY24 from Rs 64 crore in FY23. Shiprocket had said that it expects to record profits in FY25. Yet, there is much work ahead - companies such as Physicswallah saw their losses balloon in FY24. "As IPO-bound companies gear up for public spotlight, key lessons from recent listings are clear: markets value consistency, discipline, and predictability over aggressive short-term growth," said Nishit Garg, partner, Asia investment team at RTP Global. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
06-06-2025
- Business
- Time of India
Gaja Capital raises Rs 125 cr in pre-IPO round, on track to be first listed PE firm in India
Gaja Capital has raised Rs 125 crore in a pre-initial public offering (IPO) round from long-term investors as it prepares to become the first standalone private equity firm in India to list on stock exchanges, according to people familiar with the matter. The funds were raised at a valuation of Rs 1,625 crore, they said. The funds have been raised by an alternative asset management company (AMC), which will eventually be listed. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Casas de contêineres não vendidas em São Luís: Veja os preços! Casas de contêineres | Links Patrocinados Busque agora Undo SBI Life , HDFC Life , Enam and stock market investor Jagdish Master participated in the pre-IPO round. ET first reported Gaja Capital's IPO plans on November 20 last year. The alternative AMC acts as an investment adviser for funds worth $500 million deployed by the private equity firm across 24 investments. Live Events Founded by IIT Delhi alumnus Gopal Jain, Gaja Capital counts several successful bets in its portfolio. It was the first private equity investor in RBL Bank. It made a tenfold return on a Rs 75 crore investment in Teamlease in 2010. It was also an investor in CL Educate (formerly Career Launcher). Its current investments include Avendus Capital, home financier Weavers and logistics firm Xpressbees. It has also invested in Zorawar Kalra's Massive Restaurants and fashion brand Chumbak. Gaja Capital, SBI Life, HDFC Life and Enam didn't respond to ET's queries. Jagdish Master could not be contacted. Globally, the likes of KKR, Blackstone, Ares, Apollo and Berkshire Hathaway are examples of listed alternative investment firms. Gaja Alternative Asset Management was registered as a company two decades ago. This was unlike many other private equity firms, which registered themselves as partnerships that acted as investment advisers to funds under their management. Gaja Capital's AMC has been collecting fund management fees and a share of the carry or profits that are due to its fund managers over several years. By being listed, the private equity firm believes it will become more institutionalised in character, according to industry observers. Funds raised by the proposed listing are intended to provide the fund managers' capital to seed new funds, extend distribution capabilities domestically and internationally and expand into new fund management strategies, said the people cited earlier. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
