MUMBAI: Even as IPO-bound startups are pitching their high growth models to investors to seek higher valuations, the latter are in no rush to buy into their proposals. In fact, investors are increasingly becoming choosy on the valuation front, said bankers, a dampener for startups such as Zepto which had been targeting a valuation of up to $10 billion.“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,” said a banker who did not wish to be identified. Also, if mega NSE and Jio Platforms listings hit the street this year provided markets stabilise after the recent flare-up in West Asia, there will be more competition.“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.Firms (in general including startups) could see pushback from larger investors if pricing is too aggressive. This seems to be happening in some names already, Majumdar added. A volatile market aside, Walmart’s PhonePe stalled its listing earlier scheduled sometime in April this year also because it wasn’t getting the valuation it was seeking. Last valued at $12 billion, PhonePe was initially eyeing a valuation of close to $15 billion is the buzz on the street.“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,” said another banker.

Consider this: Ola Electric, which had listed with a market capitalisation of nearly $4.8 billion in 2024, higher than that of Harley Davidson at that point, is struggling today. Its stock price is over 40% down from its 52-week high of Rs 71.2 and market cap has since halved.“Valuations of startups today are tied to their financial metrics,” said Mehekka Oberoi, fund manager, IIFL Fintech Fund, adding that some companies may choose to wait for better valuations. “Given the market uncertainty now, it’s also a challenge for companies to decide how far valuations can be rationalised,” she said.Last valued at $7 billion, Zepto is headed for a listing with Rs 5,905 crore in losses as of FY26. With Amazon and Flipkart entering the quick commerce space, the competitive landscape for Zepto has changed significantly now, said bankers. At this point, investors are more selective about firms with growth models and reasonable valuations, said Rajat Rajgarhia, CEO, institutional equities at Motilal Oswal.While bankers were hoping for a busy IPO calendar in the second half of the year, the recent flare up in the Gulf has once again created uncertainty. “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,” said Prashant Singhal, partner and leader, clients & industries at EY India.