Profits Before IPO, Losses After: The Financial Reality of India’s New-Age Companies

India’s new-age startups, often hailed as disruptors, have faced scrutiny for their financial performance around IPOs. While many showcased profits ahead of listing, these gains were often temporary.

Key Highlights:

• Pre-IPO Profits: Companies like Lenskart, Urban Company, and Pine Labs reported profits before IPOs, largely driven by one-time acquisition gains, tax credits, and expense timing adjustments.
• Post-IPO Losses: Urban Company’s ₹7 crore profit turned into a ₹59 crore loss post-listing, while others like Zomato (Eternal), Nykaa, Paytm, and Swiggy also slipped back into red.
• Investor Concerns: Analysts warn that such financial turnarounds may mislead investors, as they don’t reflect sustainable business models.
• Competitive Pressure: High customer acquisition costs, discount-driven growth, and global market volatility continue to weigh on profitability.
• Long-Term Outlook: Experts suggest that while digital demand remains strong, companies must focus on operational efficiency, recurring revenue streams, and realistic valuations to regain investor trust.

This trend raises critical questions about transparency in IPO-bound startups and whether short-term profitability masks deeper structural challenges.

Sources: News Market, ScanX News, Economic Times Startup Desk