India’s Digital IPO Boom: Are Tech Unicorns Finally Ready to Rule the Stock Market?

The numbers tell a startling story. 

Tech companies now control a quarter of India’s mainboard market capitalization raised in 2025. According to Prime Database, digital IPOs collectively command a market cap of Rs 2.8 trillion this year, marking a dramatic shift in how Indian investors perceive technology businesses. But can this momentum sustain itself, or are we witnessing another speculative bubble waiting to burst?

Before we answer this question, let’s rewind to 2021 and ask another question: Why did digital IPOs crash so badly between 2021 and 2023? The first wave of digital IPOs between 2021 and 2022 reads like a cautionary tale. Household names like Paytm, Zomato, Nykaa, Policybazaar, CarTrade, and Delhivery debuted at valuations that made veteran investors wince. 

But within a year, several of these tech darlings traded 40 to 70% below their issue prices. Reason? Rising interest rates triggered a global correction in loss-making growth stocks.

BAD TIMING OR BROKEN BUSINESS MODELS?

So, was it just a bad timing or broken business models? The collapse wasn’t just about timing. Most of these companies had prioritized growth at any cost, burning cash to capture market share while profitability remained a distant dream. When the cheap money era ended, investors stopped tolerating red ink on balance sheets. The IPO market demanded substance over storytelling, and many digital IPOs simply couldn’t deliver.

This painful correction forced a fundamental reset. Today, reportedly 68 percent of new-age firms trading publicly are generating profits, an extraordinary reversal from the loss-heavy early cohort. The shift from 3% of market cap in 2022 to 25 percent in 2025 didn’t happen by accident. 

It happened because India’s technology IPO market learned hard lessons about sustainable business models. The transformation of India's technology IPO market reflects changing investor priorities.

Okay, are investors really backing all tech IPOs equally?

Not even close. The average subscription for digital IPOs this year stands at an impressive 19.6 times, but this figure masks a deeply divided IPO market. Meesho saw astronomical demand of 79 times, while Urban Company drew 60.14 times and Dev Accelerator attracted 35.82 times. 

These runaway successes create the illusion of universal enthusiasm for IPOs in technology.

HYPE? BUBBLE? IS THIS TREND FOR REAL?

But why are some digital IPOs getting 79x demand while others barely cross 1x? Scratch beneath the surface, and a different picture emerges. Bluestone Jewellery managed just 1.94 times subscription, PhysicsWallah scraped through at 1.49 times, and Ather Energy limped to 1.26 times. 

The tepid response reflects investor caution around capital-intensive businesses or those still in heavy investment mode. Not all digital IPOs are created equal, and the market knows it. 

There is another fascinating aspect at work in the public market. Though demand for tech-led products has exploded, and investors are warming up to it, the old economy still rules the battlefield. Tech’s growth is just a shift in the tide.

India’s technology IPO market may be growing, but it’s not growing evenly. According to industry reports, total fundraising is set to cross Rs 1.61 trillion across 97 deals this week, surpassing last year’s Rs 1.59 trillion from 91 issues. With more offerings lined up, the calendar year will likely close with an even larger tally. Capital strength is providing a powerful tailwind for digital IPOs.

IPOs AS EXIT ROUTE OR GROWTH ENGINES?

So, are promoters using IPOs as exit routes rather than growth engines? Several red flags demand attention. Elevated valuations remain a concern, particularly for companies that have enjoyed preferential treatment from retail investors. Regulatory shifts could upend business models overnight, as seen with quick commerce regulations and data privacy norms. 

The underperformance of offer for sale (OFS)-heavy issues, where promoters and early investors are primarily looking to exit rather than raise fresh capital, suggests that not all digital IPOs are created with long-term value creation in mind.

The final verdict, though, depends on one crucial aspect. The current boom in India’s technology IPO market needs to prove itself over multiple business cycles, not just during favourable market conditions.

Will profitability and governance matter going forward? The short answer: absolutely. 

Established names like Info Edge and IndiaMART remain steady performers precisely because they prioritized sustainable growth over vanity metrics. Newer SaaS-led platforms have turned consistently profitable, demonstrating that Indian tech companies can build real businesses, not just user acquisition machines. The question is whether this discipline persists when market conditions turn frothy again. History suggests that memory is short when valuations are rising.

But can quarterly earnings pressure hit these new digital IPOs? Well, the maturation of digital IPOs also depends on how these companies handle the inevitable challenges of public market scrutiny. Quarterly earnings pressures, activist investors, and regulatory compliance create constraints that private companies never faced. Some will adapt and thrive. Others will likely struggle to balance growth ambitions with profitability demands.

But here’s where the story gets interesting. 

TRADITIONAL SECTORS ARE STILL THE BIGGIES

Despite tech’s impressive gains, traditional sectors still dominate overall market capitalization. The 25% share that digital IPOs command, while significant, means that 75% still comes from conventional businesses. Manufacturing, infrastructure, financial services, and consumer goods aren’t going anywhere.

What’s also changing is the composition of investor portfolios. Younger investors show strong appetite for IPOs in technology, viewing them as proxies for India’s digital transformation. Older, more conservative investors remain sceptical, having witnessed multiple tech booms and busts over decades. This generational divide will shape India’s technology IPO market for years to come.

The real test, though, arrives when both traditional and digital IPOs compete for the same pool of capital during market downturns. Will investors stick with proven business models or bet on growth potential? The answer will determine whether the current boom represents a genuine structural shift or simply another cycle of speculation.

So, is this tech takeover real or just another hype cycle? The rise of digital IPOs from 3% to 25% of market cap in just three years is remarkable.  But calling it a permanent transformation would be premature. Markets have a way of humbling those who extrapolate current trends too confidently. For now, tech has earned its place at the table through improved fundamentals and profitable growth. Keeping that seat requires continued execution, not just ambitious pitch decks.

(yMedia is the agency partner for this story)