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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
Entrepreneur
13-05-2025
- Business
- Entrepreneur
IIFL Fintech Fund Exits Finarkein Analytics With Over 2X Return in 3 Years
You're reading Entrepreneur India, an international franchise of Entrepreneur Media. IIFL Fintech Fund, an early-stage fund focused on the fintech sector, has announced a successful exit from its investment in Finarkein Analytics, a financial data analytics firm. The exit, achieved at more than double the valuation in just three years, marks the fund's second profitable exit, following the sale of fraud detection firm TrustCheckr to global caller identification platform Truecaller in October 2023. The fund earned ~80% returns on the TrustCheckr investment in only 18 months. Finarkein Analytics enables enterprises to build data products leveraging India's emerging digital public infrastructure (DPI) such as the Account Aggregator ecosystem, ONDC-Financial Services, and OCEN. "With Finarkein also, we went beyond the business aspect to enhance their overall product and platform to ensure faster business adoption," said Mehekka Oberoi, Fund Manager at IIFL Fintech Fund. "Attaining a more than 100% return and ensuring liquidity to our investors underscores our commitment. We had earlier successfully exited TrustCheckr within 18 months. The fund is committed to giving cashflows to investors from time to time." Launched in 2021, IIFL Fintech Fund has invested in 14 fintech startups including Leegality, FinBox, DataSutram, Finvu, Trendlyne, and The fund boasts a 26.2X revenue growth across its portfolio over three years, with 40% of the startups being EBIDTA positive and no write-offs or deadpool cases. Recently, IIFL Fintech Fund also announced the first close of its Series II fund, securing over INR 200 crore. The new fund aims to back the next wave of fintech innovation in India, including ventures in generative AI. The Indian fintech ecosystem continues to present vast opportunities. "There is a 3-5X gap between India and developed markets in areas like insurance, lending, and mutual fund assets," the fund said in a statement. "This makes fintech one of the most promising sectors in India's growth story."
