IPO-Bound Startups Race to Turn Profitable as Investors Become More Selective

India’s latest set of startups preparing for an initial public offering (IPO) is showing a clear shift in financial discipline. Startups that have either filed draft papers or recently listed — including Lenskart, Groww, Pine Labs, Fractal, Shadowfax, boAt, Curefoods, Wakefit, and Shiprocket — are reporting stronger margins, reduced losses, or their first profitable phases in the quarters leading up to their public debut.

This marks a notable change from the aggressive growth-over-profitability strategy seen during the 2021–22 listing cycle, when several high-growth but loss-making companies entered the public markets and later struggled to sustain valuations. According to investors and founders, the landscape has now shifted significantly as markets demand more sustainable financial models.

Cost Cuts and Cleaner Earnings Ahead of Public Scrutiny

Startups aiming for public listing are tightening their financials before filing IPO papers. Many have cut operational costs, consolidated business lines, and focused on improving unit economics. In some cases, companies are also leaning on tax credits, one-time gains, and accounting adjustments to present cleaner, more stable earnings.

Industry stakeholders told Moneycontrol that these moves reflect a more mature approach as companies prepare for the heightened scrutiny that public markets bring. Startups are increasingly aware that investors now prioritize profitability and business fundamentals over rapid expansion.

Also Read:Reliance Industries Shares Hit 52-Week High as JPMorgan Turns Bullish on 2026 Outlook

Investors Emphasize Profitability and Strong Core Business

Siddarth Pai, Founding Partner at 3one4 Capital, highlighted how drastically expectations have changed. According to him, “Profitability isn’t optional — you need to be profitable or have strong reasons for your losses.”

He added that the core business must be fundamentally strong, and any losses should be explainable through new business lines or expansion strategies. With public market investors evaluating every number carefully, companies no longer have room for unclear financial narratives.

Pai further explained that a startup’s core offering must be portable and cash accretive. While expansions naturally take time to stabilize, the primary business model must operate efficiently and without heavy reliance on external funding. This benchmark is becoming central as companies prepare for IPOs.

A Clear Shift From the Previous Startup IPO Cycle

The Moneycontrol report notes that the new IPO-bound cohort stands in stark contrast to the earlier generation of startups that went public during 2021–22. At that time, fast-scaling companies rushed into the market despite heavy losses, driven by liquidity and heightened investor interest.

However, many of these firms struggled post-listing as valuations corrected sharply and profitability concerns emerged. Learning from that phase, both founders and investors are prioritizing measured growth, stronger governance, and transparent financials.

The current startup group appears to be taking a deliberate and methodical pathway — tightening spending, stabilizing revenue lines, and ensuring their unit economics can withstand public-market expectations.

Public Markets Demand Discipline

As India prepares for a new cycle of technology and consumer internet listings, startups understand that investor sentiment has evolved. With public markets becoming more selective, profitability and financial clarity have become essential prerequisites for companies planning to go public.

The broader message from investors is clear:
“The public market is unforgiving, and everything is analysed to the last decimal.”

This shift signals a new era for India’s startup ecosystem — one that favors sustainable business models and stronger fiscal discipline over rapid, high-burn growth.

Click here to explore:
Gift Nifty
FII DII Data
IPO