New-age IPOs: Five years on, still show-me stories

“Show me the money,” the memorable line from Tom Cruise-starrer Jerry Maguire, could well be the market’s refrain for India’s new-age IPOs five years on. Back in 2021, when a clutch of these companies hit the stock market, investors were asked to look beyond losses and conventional valuation metrics. With profits largely absent, revenue growth and EV-to-sales multiples became the preferred yardsticks.

Half a decade later, the picture is more nuanced. Many of these companies have delivered strong revenue growth, several have turned profitable, and a few have handsomely outperformed the market. Yet, valuations remain demanding, while reported profits at many firms continue to receive significant support from ‘other income’, and core operating profitability is still evolving. The original question, therefore, has not disappeared; it has simply changed. Can operating profits grow enough to justify the valuations investors continue to assign?