Technology is the enabler that makes economies of scale easy. Seven of the 10 Largest Companies in the World by Market Capitalization (Market value of company) are technology companies. Every transition from hunter-gatherer economy to agrarian economy, from manufacturing to service dominance and the present technology canvassing of the ecosystem confirms that change is good. The largest company, Apple, is worth more than INR177.7 lakh crores. In 2020, when Apple’s market cap amounted to INR157.7 lakh crore, it was two-thirds of India’s annual GDP of INR222 lakh crore. In terms of size, the Top 10 organizations will be equal to 4.5 India GDPwise.
Technologically India
With the buzz around technology, that can catapult the complete industry to a new level, India’s focus on technology is clear. From 48% digital buyer penetration in 2016 to 70% in 2020, our acceptance has given a boost to the startup space. Flipkart, Ola & Zomato are household names today.
Bangalore head-quartered, Singapore-registered, e-commerce giant, Flipkart grew 15 times in 2019 from a revenue of INR2800 crore in 2014. Walmart acquired Flipkart in 2018 in a INR1.2 lakh crore deal and news has it that the latter has led the Q4 FY 20-21 net sales internationally for the former. Walmart has not set a date for Flipkart’s IPO. However, it is open to the idea.
Ride hailing platform, Ola was hit hard by the pandemic, as travel came to a stand still. One of its investors, Vanguard Group, discounted its value by 50% last June — from INR44430 crore to INR22215 crore. OLA has successfully closed INR3702 crore in July 2021 at 25-30% discounted valuation to last year’s valuation. Ola’s IPO is in the offing.
Zomato IPO
Zomato’s CEO, Deepinder Goyal, mailed his employees in September 2020, about his desire to get the company listed on the Indian Stock Exchange by mid-2021. At the time, it was considered an ambitious announcement. At an issue size of INR9635 crores, Zomato’s IPO was oversubscribed 38 times and July 2021 witnessed the listing at a 50% premium over its issue price. From there, the script has touched a high of double the issue price.of INR76.
The IPO proceeds will fund both organic and inorganic growth initiatives.
It even surprised market pundits when a company with no history of profitability, and with losses amounting to an estimated INR8164 crore in the year ended March 2021, listed on the bourses. Zomato was present in 23 countries, 526 cities, boasted 3.5+ lakh active Restaurant Listings as on Dec 2020. It marked the start of a phase in the Market when the future prospects alone decide the investor appetite for a stock. Besides, it gave a huge boost to the confidence of the Tech Startup community as a whole.
Looking ahead
The pandemic has made technology a necessity; it is no longer a luxury. It has catapulted organisations that are capable of working from anywhere, or from the cloud as they say.
Young investors, who have experienced the services or products of industry disruptors, are riding the wave. In addition, Zomato’s IPO has paved the way for the likes of Policy Bazaar, Delhivery, Nykaa, Paytm and Ola. And only last week, a Chennai based startup–called Freshworks–filed a billion dollar IPO in the US stock market.
Make hay while the sun shines. And keep a lookout for the next big opportunity. Only today, India’s burgeoning edutech space has yet another unicorn start-up. Bangalore-based Vendantu is now the fifth edutech unicorn in the country.
Each transition–from a hunter-gatherer economy to an agrarian one, and from manufacturing to the current fourth industrial revolution–shines the spotlight on change. Every few decades, the old order makes way for the new. Change truly is the only constant.
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