While new-age tech IPOs are often launched with fanfare and lofty expectations, the post-listing reality has been far less glamorous. Nearly half of these companies that went public so far have seen their stock prices falter, trading below the post listing price, according to an analysis by ETMarkets.Out of 11 new-age technology companies that made their way on to the D-Street, 5 of them have yielded negative returns for investors, even after an extended post-listing period. This contrasts with the listing gains as 9 out of the 11 companies delivered positive returns to investors on debut.<iframe title="New-Age Tech IPOs: A Mixed Bag" aria-label="Table" id="datawrapper-chart-hPENk" src="https://et-infographics.indiatimes.com/graphs/hPENk/1/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="591" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r=0;r<e.length;r++)if(e[r].contentWindow===a.source){var i=a.data["datawrapper-height"][t]+"px";e[r].style.height=i}}}))}();</script>CarTrade Tech and Paytm disappointed investors the most after their market debuts. While the former's stock has seen a 35% decline since its debut, Paytm’s shares have dropped 65%, highlighting significant losses for investors.Paytm’s journey has been especially turbulent. The company initially faced intense scrutiny over profitability, which dampened early investor confidence. The situation worsened when the Reserve Bank imposed restrictions on Paytm Payments Bank, delivering a severe setback that further weighed on investor sentiment.Nykaa, which entered the market as one of the few profitable tech companies, has also struggled to meet investor expectations post the IPO. Despite its initial promise, the stock has come under heavy scrutiny, currently trading 50% below its post-listing price.Investor sentiment for new-age tech IPOs is influenced by factors like revenue growth, market position, scalability, and, critically, the path to profitability. Companies which have shown a clear path to profitability coupled with strong growth strategies have fared better.Zomato, initially met with skepticism, scripted a notable turnaround in its financials by achieving profitability, which caught investors' attention. The food delivery company's stock more than doubled since the listing.EasyTrip Planners has been the standout successful story among its tech peers. Three years after the listing, its shares surged over 150%, making it the most prosperous of the new-age tech IPOs."Companies that are market leaders with strong fundamentals and a clear growth trajectory tend to fare better. For instance, we have seen positive transformations in companies like Zomato and PolicyBazaar, which have steadily improved their market positions and financial performance over the years. However, companies facing growth challenges and regulatory hurdles like Paytm have struggled to maintain investor confidence," said Abhishek Jain, Head of Research, Arihant Capital.What's in store for Swiggy?Swiggy, an emerging player in quick commerce and food delivery is gearing up for its marquee public offer, which is creating a lot of buzz in the market. The Rs 11300 crore IPO opens for bidding on November 6.Analysts said Swiggy’s positioning aligns with the high-growth narrative often associated with other tech IPOs in the past, but its financials reflect a longer timeline to profitability.Profitability concerns are significant, as investors have become increasingly wary of tech companies requiring extended timelines to post positive bottom line numbers.The company has more than doubled its revenues to just over Rs 11,000 crore in the last two fiscals, but the bottom line is still in the red with a loss of Rs 2,350 crore in FY24."For Swiggy, profitability may remain elusive for the next few years, particularly on a consolidated basis. The company's quick commerce business has yet to show strong performance, and achieving profitability across all segments may take time," Jain said.The IPO values Swiggy at around $11.3 billion, which reflects a more cautious approach as against its earlier goal of $15 billion a few months ago.Analysts noted that Swiggy appeared to have noted the post-IPO volatility many tech companies have experienced due to inflated valuations. By setting a more measured pricing strategy, the company is likely aiming to avoid the significant share price declines that have affected other tech IPOs in India.As things stand, Swiggy's IPO may appeal more to investors with a high-risk appetite, who are optimistic about the company's potential for long-term transformation, but recognize the current limitations in growth and profitability."As with its listed peer Zomato, which also debuted with a focus on scaling before profitability, Swiggy may appeal more to investors who are comfortable with long-term risks in exchange for the potential in this fast-evolving sector," said Santosh Meena, Head of Research, Swastika Investmart.However, the company' ability to manage costs and demonstrate progress toward profitability will be crucial in maintaining investor confidence post-listing."Swiggy's success post-IPO will largely depend on its ability to reassure investors of sustainable growth and gradual profitability improvements in the coming quarters," Jain said.(With data inputs from Ritesh Presswala)(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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