IPO-bound startups are finding a tough audience among investors, who are increasingly skeptical of high-growth narratives without clear financial metrics and realistic valuations. According to a report by Business-Today, bankers report that investors are becoming more selective, pushing back against aggressive pricing and demanding a clear path to profitability.
Valuation Pushback Hits Top Startups
Zepto, the quick-commerce startup last valued at $7 billion, had been targeting an IPO valuation of up to $10 billion. However, that goal appears distant. A banker who did not wish to be identified told Business-Today, "Zepto's expectations have been way off for quite some time. They were also looking to do a private round at around $8-9 billion valuation but couldn't so far." The company heads to listing with Rs 5,905 crore in losses as of FY26, and the entry of Amazon and Flipkart into quick commerce has intensified competition.
PhonePe, the Walmart-owned digital payments firm last valued at $12 billion, stalled its listing earlier in 2026 because it wasn't achieving the valuation it sought—reportedly near $15 billion, according to market buzz.
Investor Caution Driven by Past Outcomes and Mega Listings
A volatile secondary market and recent large flotations are amplifying investor caution. If NSE and Jio Platforms proceed with their mega listings this year, subject to stable markets after the West Asia tensions, they could draw significant capital. "These (mega listings) are likely to see good investor interest and significant deployment of capital there. Larger investors will have more names to choose from and will be wary of valuation asks from companies," said Keyur Majumdar, managing partner & CIO-AIF at Bay Capital.
Another banker added, "The primary market will in some ways price off the secondary markets where things are more rational now. Besides, with these digital new-age businesses, there is a far greater demand for a path to profitability and visibility on how and when they will get there. Past experience of investors buying into growth stories at very high valuations led to bad outcomes and so investors are more demanding now."
Ola Electric’s Post-IPO Struggles Serve as a Warning
The case of Ola Electric illustrates the risks of lofty valuations. Listed in 2024 with a market capitalisation of nearly $4.8 billion—higher than Harley Davidson at that point—the company is now struggling. Its stock price is over 40% down from its 52-week high of Rs 71.2, and its market cap has halved since listing.
| Metric | At Listing (2024) | Current (July 2026) |
|---|---|---|
| Market Cap | ~$4.8 billion | Halved (est. ~$2.4 billion) |
| Stock Price (52-week high vs now) | Rs 71.2 | Over 40% below high |
Geopolitical Uncertainty Clouds IPO Calendar
Bankers had hoped for a busy second half of the year, but the recent flare-up in the Gulf region has introduced fresh uncertainty. Prashant Singhal, partner and leader, clients & industries at EY India, warned: "If the current situation of unrest isn't resolved within the next 4-6 weeks, it could significantly impact the IPO market, making this year challenging for new listings."
Mehekka Oberoi, fund manager at IIFL Fintech Fund, noted, "Valuations of startups today are tied to their financial metrics," adding that some firms may postpone their plans. Rajat Rajgarhia, CEO, institutional equities at Motilal Oswal, echoed that investors are now more selective about firms with growth models and reasonable valuations.
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