India's largest two-wheeler maker, biggest beer brewer and aluminum producer are smaller than startups like Byju's, Paytm, and OYO
- 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.
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.
AdvertisementWhat’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?
Source: BSE, media announcements
|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)|
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.
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