Listed start-ups to contribute 4-5% of India’s market cap: Report

A growing number of late-stage start-ups are gearing up for public listings, according to The RainGauge Private Pulse report by The Rainmaker Group. The report highlights a cohort of 38 high-growth start-ups spanning consumer internet, fintech, B2B, and edtech—companies that have collectively raised $35 billion and are now valued at over $100 billion.

The report notes that this latest batch of IPO-bound start-ups, including names like Zepto, Groww, and Ather, is demonstrating stronger pre-listing performance in both growth and profitability compared to previous IPO waves.

In a notable shift from India’s long-standing dominance in software-led businesses, non-software companies are now making a mark in public markets. Businesses like Lenskart and OYO are expanding beyond India, with 40 per cent and 80 per cent of their revenues, respectively, coming from overseas markets such as Japan and Europe.

Financial fundamentals

These start-ups are not only scaling faster but also improving their financial fundamentals. The RainGauge Private Pulse cohort recorded an impressive 39.1 per cent y-o-y revenue growth in FY24, significantly outpacing the 12.3 per cent growth of the S&P BSE MidCap Index in the same period.

Looking at past IPO trends, the first wave (featuring Zomato and Nykaa) focused on aggressive growth but struggled with profitability. The second wave (Swiggy, FirstCry) saw more measured valuations but many companies still listed below expectations, with some trading below their last private funding rounds.

As a result, many start-ups have adjusted their IPO strategies, prioritizing sustainable growth and profitability. The upcoming third wave of IPOs appears fundamentally stronger, with several companies already achieving operating profitability ahead of their public listings.

With Zomato’s recent inclusion in the NIFTY50, the report suggests that more VC-backed companies could soon join benchmark indices, making India’s public markets younger, faster-growing, and more representative of the country’s evolving economy