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Profits Shine Before IPOs But Fade After Listing, Raising Investor Concerns

Swarnadwip Nath Published Dec 02, 2025, 04:31 PM Updated Sep 17, 2026, 05:13 AM

Several Indian IPOs, including Nykaa, Paytm, and others, have shown strong profitability before listing but struggled post-IPO. Analysts suggest aggressive pre-listing accounting, inflated growth expectations, and market corrections as reasons. The trend raises questions about transparency, governance, and sustainability of startup valuations in India’s booming IPO market.

India’s IPO boom over the past five years has delivered both spectacular debuts and sobering corrections. Companies like Nykaa, Paytm, and others projected strong profitability before listing, only to face fading earnings and valuation resets after hitting the public markets. This pattern has sparked debate among investors and regulators about whether pre-IPO financials are overly optimistic and whether governance lapses are eroding trust.

Key highlights from the announcement include

Nykaa’s IPO in 2021 surged nearly 89% on listing day, but subsequent quarters saw margin pressures and slowing growth.
Paytm’s record-breaking IPO of Rs 18,300 crore in November 2021 was followed by steep declines, with profitability elusive even years later.
Canara Robeco and other asset managers have faced scrutiny for overstated pre-IPO performance metrics compared to post-listing realities.
Analysts point to aggressive customer acquisition spending and accounting adjustments that make pre-IPO profits look stronger than sustainable levels.
Post-listing, companies face quarterly disclosure requirements, exposing operational inefficiencies and market competition.
Investor appetite has cooled, with valuations resetting across tech and consumer startups, reflecting a more disciplined market environment.
Governance lapses and lack of transparency in financial reporting have further dented confidence in some IPO-bound firms.
Despite early stumbles, experts note that India’s IPO market remains vibrant, with long-term opportunities in digital and consumer sectors.

The divergence between pre-IPO optimism and post-listing reality underscores the risks of chasing hype-driven offerings. While IPOs provide capital and visibility, they also expose companies to stricter scrutiny and market discipline. For investors, the lesson is clear: focus on fundamentals, governance, and long-term sustainability rather than short-term profit spikes.

Sources: Fortune India, Mathrubhumi, LinkedIn Analysis

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