Founder Kunal Bahl Explains Why Snapdeal Postponed its IPO

The Indian e-commerce firm Snapdeal, established in 2010, had intended to list on the stock market in 2021, however, the IPO had to be delayed because of market circumstances. To learn more about the company’s choice, Business Today had the chance to speak with Snapdeal’s founder, Kunal Bahl.

Bahl, who invests in early-stage start-ups through his venture capital firm Titan Capitals, said the funding shortage “was not just from private equity players turning compact-fisted but also into how much funding businesses were able to draw from the public equity market.” He stated that the global market conditions, specifically the inability of the company to obtain as much financing as it had intended, were to blame for the deferral of Snapdeal’s initial public offering (IPO).

Snapdeal IPO: Cash Flow and Economic Viability To Be Considered

In addition, Bahl pointed out that investors are now concentrating on economic viability and cash flows rather than the fanfare that numerous new-age digital enterprises experienced when they debuted on the Indian stock exchanges.

The e-commerce company’s founder stated that he believes the lesson has been beneficial for the ecosystem as a whole. The fact that businesses throughout our ecosystem are focusing on profitability is therefore not surprising, as everyone is aware that ultimately likely there will be some M&A in the private markets.

There would be a limit to the expansion of their valuations and their appeal to growth investors, he continued, until enough tech businesses that are currently private list in the public markets in India and had a successful listing.

Favorable Listing Plays an Important Role

Bahl emphasized that the solution lay not in the timing of market openings and the establishment of favorable listing circumstances for new-age firms, but rather in the readiness of the sector’s companies to produce sufficient cash flows and earnings for the public markets to view them as more sustainable and meaningful.

Because of the state of the market, Snapdeal is not the only company delaying its IPO. Many other Indian businesses have followed suit, including the content-to-commerce portal Good Glamm Group, wearables brand boAt, jewelry chain Joyallukas, and hotel aggregator OYO.