Porinju says 90% of unicorns are bubbles waiting to burst

NEW DELHI: Smallcap czar Porinju Veliyath in a tweet on Thursday said that 90 per cent of the unicorns are bubbles waiting to burst.

India was home to 51 unicorns, in 2021, up by 25 from a year ago. There are 32 Gazelles (start-ups founded after the year 2000 and have the potential to turn into unicorns in two years) and 54 Cheetahs (potential unicorns in four years), according to Hurun Future Unicorn List 2021.



As per PGA Labs, India may add 45 startup unicorns in the next 12-18 months.

Veliyath, who is the founder of Equity Intelligence India, had in the past raised concerns over investing in loss-making companies.

"Turnover is vanity, profit is sanity, but cash is reality,” he had said in a tweet on November 10. He had then suggested that investors chasing new-gen loss-making IPOs at crazy valuations should realise that many of them "may never make profits nor exist with relevance."

As things are, new age listings -- One 97 Communications(Paytm), FSN Commerce (Nykaa), Zomato and PB Fintech (policy Bazaar) -- who together commanded Rs 3.58 lakh crore in market value on Day 1 of their listings, have eroded Rs 1.30 lakh crore in investor wealth post debut.

A recent Jefferies report suggested that a Fed tightening cycle can delay the much-anticipated listings of some of India’s many unicorns, but will not end it. Jefferies said the arrival of a growing number of quoted digital plays is clearly coming, which will add another dimension to the stock market.