Next Wave Of Internet IPOs To Ride On Profitability, Not Hype: BofA

India is now the world’s third-largest tech maiden offering hub, trailing only the US and China, according to BofA Securities’ latest report. After extensive ground checks, investor meetings, and city visits, the brokerage says it remains bullish on India’s internet sector, retaining ‘buy’ ratings on MakeMyTrip, Info Edge, and FirstCry.

BofA’s report classifies India’s digital listings into three cohorts:

Cohort 1 (2021–22): The early birds like Zomato, Nykaa, and PB Fintech. These companies went public when liquidity was flush and investor benchmarks were absent. Most were loss-making, but they’ve since set the tone for what success or failure looks like in public markets. The group collectively holds a market cap of $56 billion.

Cohort 2 (2024): These companies (like Swiggy, FirstCry, Ixigo, and MobiKwik) had benchmarks to live up to but launched in a tougher macro environment. Most are trading below their IPO or last private round valuations. For example:

• FirstCry: Valuation down 16%.

• Swiggy: Down 4%.

• MobiKwik: Down a steep 72%.

• On the flip side, Ixigo and TBO Tek have gained over 100% since IPO.

Cohort 3 (Coming soon): The next-gen players have learnt that profitability is no longer optional. Public markets are no longer rewarding just growth; they’re demanding cash flow visibility, says BofA. These companies are likely to be valued on 2-year forward EV/Ebitda or P/E ratios.