India’s start-up IPO frenzy is showing no signs of cooling, but the rush to list is stirring unease among investors about overheated valuations and slim profits.
The latest to hit the markets, eyewear retailer Lenskart, raised over Rs 7200 crore in a blockbuster issue that sold out within hours — only to stumble on debut this week. Its founder and Shark Tank India judge Peyush Bansal may have built a household brand, but investors are questioning whether its valuation, said to be near $5 billion, is justified.
Soon after, Groww, India’s largest retail brokerage backed by Satya Nadella, launches its listing — with bids for 17 times more shares than on offer. Pine Labs, another high-profile fintech unicorn, is next in line. These come amid a record year that has already seen 43 start-ups go public, according to Tracxn — five times the 2020 tally.
While some hail the listings as a sign of maturity after a painful funding winter, others see signs of a bubble. “Many of these companies are still loss-making, yet their valuations are priced for perfection,” says an early-stage investor. “Retail investors are getting caught up in the hype.”
Indeed, the IPO boom has become a lucrative exit route for venture capital and private equity funds that had been struggling to cash out. But analysts warn that the new entrants — small investors buying in after listing — may end up paying the price.
“Founders and bankers are walking a fine line,” says Shailendra Singh of PeakXV Partners, which has backed Groww and Pine Labs. “They need to balance valuation ambitions with fairness to the public.” Singh concedes valuations are “structurally high” in India but argues that strong tech firms often command global premiums.
History offers mixed lessons. While early investors in Zomato, Nykaa and Ixigo saw impressive gains, several others have delivered lacklustre post-listing returns. Analysts note that even profitable start-ups trade at earnings multiples far above established blue chips.
There are, however, signs of discipline emerging. Neha Singh of Tracxn says fewer start-ups are folding — just 724 this year, down 81 percent from 2024 — as founders prioritise “sustainability and profitability over blitzscaling.”
Still, venture funding remains subdued at $9.8 billion so far this year, well below the $40 billion raised in 2021. With valuations under sharper scrutiny and retail investors growing cautious, 2026 could test whether India’s start-up IPO boom is built on solid fundamentals — or on froth.
