scorecardIndia's largest two-wheeler maker, biggest beer brewer and aluminum producer are smaller than startups like Byju's, Paytm, and OYO
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India's largest two-wheeler maker, biggest beer brewer and aluminum producer are smaller than startups like Byju's, Paytm, and OYO

India's largest two-wheeler maker, biggest beer brewer and aluminum producer are smaller than startups like Byju's, Paytm, and OYO
Business6 min read
  • Byju’s, Paytm, OYO and Ola are currently valued higher than Ashok Leyland, Indian Hotels and Escorts.
  • Paytm is seeking a valuation of $25-30 billion with its public debut, which will pit it with Titan Company and Nestle.
  • Though none of these companies are profitable, looking at Zomato’s mega blockbuster hit losses do not seem to be an issue for retail investors.
The Indian tech startup ecosystem is at its prime at the moment, with at least a dozen big names prepping to go public by the end of this financial year. There is a lot to look forward to and a lot of anticipation on who fairs what, especially when they are pitted against some serious contenders in the public market.

Looking at the prime example of Zomato’s mega blockbuster hit on the stock exchange, we know that the lack of profitability is not going to be a challenge for most of these newage players.

Zomato went from being valued at $5.4 billion to sitting on a market cap of ₹1 lakh crore (around $14.5 billion) on the first day of listing in June. It continues to be in that position even today.

What’s coming next is the IPOs of India’s top four startups — Byju’s, Paytm, Oyo and Ola —, in terms of the valuations. The most interesting aspect of these startups is that they have managed to surpass India’s biggest players in several domains in terms of valuation in the private market.

What’s there to see next is who else will they surpass next?

Company

What it does

Market Cap/Valuation

Titan Company

Largest diamond and jewellery brand

INR 1,91,043 crore ($25.6 billion)

Nestle

Largest consumer food products

INR 187,224 crore ($25 billion)

Byju's

Largest edtech platform in India

$18 billion

Paytm

Largest digital payments network

$16 billion

Bajaj Auto

Largest two and three wheelers

₹1,11,811 crore ($15 billion)

Oyo

Largest budget hotel chain startup

$9.6 billion

United Spirits

Largest breweries and distilleries

INR 63,962 crore ($8.5 billion)

Ola

Largest cab hailing service based out of India

$6.7 billion

Ashok Leyland

Largest trucks maker

INR 38,748 crore ($5.2 billion)

Indian Hotels

Top hotel, resort and restaurants

INR 22,774 crore ($3 billion)

Escorts

Largest tractor maker

INR 20,101 crore ($2.7 billion)

NALCO

Largest aluminium & aluminium products

INR 19,100 crore ($2.5 billion)

PVR

Top film production, distribution and entertainment

INR 10,122 crore ($1.3 billion)

Source: BSE, media announcements
Note: These companies are termed as the “largest” based on their market capitalisation or valuation.

Post listing valuation expected to go hire post issue

According to several media reports, Paytm is seeking a valuation of $25-30 billion with its public debut. The company has the potential to surpass the biggest listed jewellery brand Titan and largest consumer food products Nestle with this ambition.

Byju’s on the other hand, which is expected to go public next year, is currently valued at $18 billion and is the highest valued edtech startup in the world. The company is said to be seeking a $21 billion valuation in the current ongoing private equity round and is expected to seek a much higher valuation, given the aggressive expansion plans it is executing at the moment to enter international markets.

Anita Kishore, chief strategy officer at Byju’s, in a previous conversation with Business Insider noted that Byju’s is in no hurry to go public as they have enough demand from private equity investors to raise money.

According to Business Insider’s sources aware of the development, Ola’s valuation is expected to hit $15 billion post issue and OYO’s is pegged at over $10-$12 billion.

The public market is not just going to be about hefty valuation in the dalal street, but also how one has built its business to surpass multiple challenges. From what we know now, the Indian startups are yet to prove their business model in terms of profitability.

Sanjeev Bikchandani, founder and chief executive of InfoEdge, thinks that profitability is only two-three years away for these publicly listed new age startups.

Whereas some of the companies like Nestle and United Spirits are churning huge profits even now, and are considered to be safer bets in times of crisis. Yet, investors are paying top dollar for the new age tech startups because they see these as businesses of the future.

Deven Choksey, promoter of KRChoksey Group and MD of KRChoksey Shares and Securities, believes that the new age business has the potential to pivot, enter new segments and that's “the beauty of these businesses”.

“There would be an argument about the valuation and about the losses, but this is a new age business. It is obvious that you have to live with these kinds of arguments and you have to allow them to prosper,” he added.

While there are many who wonder if these valuations for tech startups are justified, the market seems happy with risk.

SEE ALSO

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Indian government dials M for moratorium – Airtel, Vodafone Idea get a four-year relief on AGR dues

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