"IPO is the Beginning of a New Journey," says IndiaMart Founder Dinesh Agarwal, founder of IndiaMart, talks about the reasons behind his company's successful IPO and why preparation is the most important factor to succeed at public listing
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Amid several star companies failing to make a mark at the initial public offering (IPO) this year, one company, emerged a clear winner at the stock market listing. B2B market place IndiaMart's performance at IPO was surprising and unexpected.
According to the National Stock Exchange (NSE), on the third day, the IPO was oversubscribed almost 36 times. Touted as one of the most successful IPOs of 2019, IndiaMart is a success story every company now wants to imitate. BIZ Experiences India caught up with founder of IndiaMart, Dinesh Agarwal, at the LetsIngnite summit organized by LetsVenture.
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The IPO Success
Agarwal says there is always a need for a quality company that has positive financials and shows potential.
Confidence in their financials is what led to taking the plunge at the stock market. Agarwal says, "We were convinced about our numbers and our numbers were growing." He also said they had a 25-30 per cent growth rate before the IPO. "We were quite confident that, come what may, our numbers will be taken well by the investors."
On the growth versus profitability debate surrounding the business ecosystem ever since cash burning companies failed at IPOs, Agarwal has "no opinion". However, he says the single parameter of profitability is not enough to succeed at IPOs. He says, "In the past, there has been a lot of focus on chasing growth, at any cost, which I guess has now been moderated now."
IPO: A New Beginning
Agarwal doesn't believe in basking in the glory of the IPO anymore. "IPO is supposedly the beginning of a company," he says and further added, "I was running a private company for 20 years, so now I will be running a public company for the next 20 years."
"IPO is all about starting over again." According to Agarwal, once the listing of the company is done and it is profitable, there are many other aspects to think about. For example, how to ensure the better deployment of cash and how to take advantage of the credibility and visibility that the company has earned, among other things.
He also said the company is looking at fintech and software-as-a-service (SaaS) opportunities to expand.
For companies looking at public listing, Agarwal believes preparation to be an important factor to succeed. He says, "There are too many things you have to practice after getting listed and unless you don't practice them some two-three years beforehand, you cannot become a public company overnight."
Building a Successful Business
Agarwal founded IndiaMart with a mere seed funding of INR 40,000. Today, is it a multi-crore business which had a surprising yet successful run at the stock market. It has 83 million buyers and clocked revenue of INR 507 crore in FY 2019.
So what are the requirements for building a successful business? Agarwal's first reaction is, "It is very easy to find out why something failed but very difficult to tell how it succeeded."
However, several things that have worked for him and his business are teamwork, timing, long-term commitment and luck.
