1. 3 Articles analysis. 2. Success factors 3. Failure Factors 4. IB Advice

1. PGP Rise | 2023-24
STARTUP IPOs
C A S E S T U D Y - W E E K 3
Anindya Singh

2. The growing trend of startups in India opting
for IPOs and the advantage of going public.
This article discussed the trend of
startups going public through IPOs.
Highlighting the advantages such as
access to a large pool of capital, the
ability to raise debt, ownership
diversity, and increased credibility.
It also emphasized the positive
perception of IPOs from the public
and investors.
There was mention of the book
"Startup Compass" by Sahil Barua
(Delhivery), which explores the
reasons startups opt for IPOs.
Article 1 Article 2 Article 3
Interview with N R Narayana Murthy, who
discusses the rapid growth of startups in
India and shares his concerns about startups
Indian startups planning to go public, their
sectors, expected IPO sizes, and potential dates.
Mr Narayana Murthy discussed that
startups are growing faster than
Infosys did in its early days.
He attributes the rapid growth of
some startups to their ability to
convert in-person purchases to
online purchases.
He expresses concern about startups
going public without achieving
profitability and suggests focusing
on the PEG (Price/Earnings Growth)
ratio.
By initially mentioning the vision for
Infosys of putting respect above
revenue and profits. He highlighted
the importance of staying focused on
quality, productivity, and customer
orientation to remain relevant.
Information on ten Indian startups
planning to go public with their IPOs
in the near future.
Names of the startups and their
sectors, expected IPO sizes, and
potential IPO dates.
It mentions that many of these
startups are not profitable, but they
have raised significant funding from
investors.
The Indian startup ecosystem has
seen significant growth in recent
years, with unicorns and startups
going public.
1. Articles Summary

3. 2. Success and Failure
Sucess Factors
Investor Confidence
Building investor trust through
transparent operations and
adherence to governance
standards is critical.
Paytm's IPO received mixed
reviews due to concerns about its
governance practices.
Profitability and
Financial Health
Market Potential
Profitable startups with strong
financials tend to perform well.
Zomato's IPO was well-received
due to its improving financials,
despite historical losses. It posted
its first-ever net profit of INR2 crore
in Q1 FY24.
Those startups which address
large and untapped markets tend
to succeed.
Nykaa's IPO success can be
attributed to the booming beauty
and cosmetics market in India.

4. Failure Factors
Market Conditions
Market volatility and economic
uncertainties can affect IPOs.
Some startups may postpone their
IPO plans during unfavourable
market conditions.
e.g. ixigo, OYO, Droom, Snapdeal,
PharmEasy, MobiKwik, etc.
Regulatory Scrutiny
Lack of Profitability
Non-compliance or regulatory
issues can lead to IPO setbacks.
Paytm faced scrutiny from SEBI
regarding its IPO, impacting
investor sentiment.
Startups with sustained losses may
face investor scepticism.
Zomato, although successful in its
IPO, has struggled with post-IPO
stock performance due to losses.

5. The advice on when to do an IPO would depend on various factors specific to the company, its
financial health, and market conditions. Following will be the parameters before taking a decision.
3. Investment Banking Advice
E-commerce Startup
Achieved profitability
Has a solid customer base
A clear growth strategy
Evaluation of the following
parameters:
It may be a suitable time to
consider an IPO.
Stage of Growth
Assessment of the current
market conditions and investor
sentiment.
Favorable market conditions can
increase the chances of a
successful IPO.
Market Conditions
Ensure a track record of
financial stability and growth.
Profitability or a clear path to
profitability can attract investors.
Financial Health

6. Strong governance practices
Transparency
Build investor confidence through:
Investor
Confidence
Determining and analysing the
startup's exit strategy based on
the founders’ and investors’
ideation.
An IPO can provide an exit
strategy for early stakeholders.
Exit Strategy
Competitive landscape in the e-
commerce sector.
If the startup can differentiate
itself and capture market share,
it may be a good candidate for
an IPO.
Competitive
Landscape
Alignment to the startup's long-term strategic goals and market conditions will help to make decisions.
So based on the above 6 parameters if these are aligned properly then I would suggest the startup for an IPO.

7. https://yourstory.com/2021/12/heres-a-list-of-indian-startups-planning-to-make-a-debut-in-the-bourses-in-2022
Year 2021-22
https://inc42.com/features/after-the-lull-in-2022-will-startup-ipos-pick-pace-in-2023/
Year 2023 and Beyond
The following articles gives two different perspectives based on market sentiments

8. Thank You