India’s latest wave of tech and consumer internet listings has drawn strong interest from domestic retail investors, with several newly listed companies delivering sharp gains. As Barron’s highlights, shares of education technology pioneer PhysicsWallah(NSE: PWL) jumped by a third after its debut recently; Billionbrains Garage Ventures, the parent of online brokerage Groww(NSE: GROWW), has risen by half since its November 12 listing; and services marketplace Urban Company(NSE: URBONCO) is up 40% from its mid-September flotation.

These companies may be unfamiliar outside India, but they are increasingly visible to the retail investors now pouring around $3bn each month into Systematic Investment Plans in search of high-growth, new-economy opportunities. As Barron’s reports, this appetite is also reshaping the deal pipeline. “With 80% of retail money going into small and mid-cap mutual funds, every investment banker with a pulse is IPOing,” says Saurabh Mukherjea, chief investment officer at Marcellus Investment Managers in Mumbai.

According to Barron’s, the sharp rise in tech listings does not imply a repeat of earlier global market busts such as Pets.com or Global Crossing. While start-ups elsewhere are chasing breakthroughs in artificial intelligence, India still has significant scope for expansion in first-generation e-commerce. Government-backed digital infrastructure, including nationwide payments and identification systems, has strengthened the foundations of the country’s online economy. “I’ve never seen anything as compelling as the Indian internet for companies to buy and hold,” says Kevin Carter, founder of EMQQ Global. “Almost every part of the economy is ripe for consolidation.”

Larger issuances are expected in the coming months. Carter predicts that Flipkart and payments provider PhonePe could list early next year, while Reliance Industries’ Mukesh Ambani has suggested that Jio Platforms may eventually follow.

Overseas investors, however, remain selective. “A company like Urban is a fascinating business that doesn’t make any money yet,” says Rob Brewis, head of emerging markets at Aubrey Capital Management. “We’ll take another look when we are pretty sure we can measure profitability.”

India’s digital sector has already experienced a dramatic cycle. Around two dozen start-ups that listed in 2020–21 fell by roughly three-quarters at their lows in 2023–24. Some of these “fallen angels” have since rebounded strongly, benefiting patient investors. Aubrey holds Eternal, the parent of Zomato(NSE: ETERNAL), and FSN E-Commerce Ventures, which owns Nykaa(NSE: NYKAA). Dalton Investments has acquired discounted positions in One97 Communications, the holding company of Paytm(NSE: PAYTM), and CarTrade Tech(NSE: CARTECH).

Valuations appear more disciplined heading into 2025. Portfolio co-manager Venkat Pasupuleti notes that mutual funds receiving large SIP inflows increasingly influence pricing. “The top four mutual funds control 80% of the flows,” he says. “They are the price setters now.”

Some companies are taking markdowns from their private valuations. Payments provider Pine Labs listed at about $3bn, around 40% below its prior funding round. Even so, the enthusiasm of wealthy Indian family investors for pre-IPO opportunities remains strong. “Everybody is throwing names around: I have this company, I have that company,” Pasupuleti says. “The pipeline is crazy.”

Against this backdrop, Mukherjea argues that established, high-quality large-cap Indian companies offer overlooked value as domestic investors chase newer stories and global investors focus on artificial intelligence leaders. “Very few people are interested in buying large-cap quality now,” he says. “You’re seeing the cheapest valuations in a decade.”