India’s new-age platforms: From fad to fundamentals

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Back in 2021, when India’s new-age tech companies were rushing to go public, we wrote to you about the “FAD–FOMO–FADE” cycle. It was a time of exuberance and fear of missing out (FOMO) – reminiscent of the late-1990s dotcom bubble when investors chased internet stocks with little regard for profits. We chose to stay away then. The valuations were astronomical, losses were mounting, and the risk–reward looked heavily skewed against investors.

We were never against platform companies but much like during the Y2K-era mania (where there were many dotcom startup IPO’s without viable business models), we saw a high chance that the fad would eventually fade, fast forward to today – the landscape looks dramatically different. The very companies that were once poster child of excess are now beginning to demonstrate discipline, profitability, and durable business models.

The four pillars of transformation:

1. From growth-at-all-costs to profitable growth

   The old obsession with GMV, user counts, and “eyeballs” has given way to a sharper focus on unit economics. Scale is no longer the only prize — contribution margins and profits now matter. For instance, Zomato ~5x its contribution profit per order from INR 6.6 in FY22 to INR 36.3 in FY25 by raising take-rates and rationalising discounts. That’s a fundamental pivot from cash-burning growth to sustainable profit.

   

2. Operating leverage kicking in

   Years of heavy cash burn are behind them, and path to profitability is visible. Every additional rupee of revenue now contributes disproportionately to earnings. Paytm illustrates this best. By July 2025, Paytm reported its first net profit — ₹122 crore for Q1 FY26 versus an ₹840 crore loss a year earlier — driven by cost control, stronger payments revenue, and AI-led efficiency. The point is simple: growth is now translating into profits.

   

3. Funding tightens, focus sharpens

   The era of easy money is over. With funding no longer flowing freely, companies have had to get real about making profits. The days of chasing growth by burning cash are gone — businesses are now focused on building solid, self-sustaining models. Indian platform companies that went public in 2021–22 are a good example: after years of experimentation and heavy losses, they’ve tightened costs, sharpened focus, and turned profitable. It’s no longer about selling a dream — it’s about showing real earnings.

   

4. Valuation reset and Institutional Interest

   The excesses of 2021 have been corrected. Most new-age tech stocks fell 40–70% from their peaks, wiping out the froth. That reset flushed out weak hands and forced managements to focus on fundamentals. Today, as earnings trajectories improve, large institutions are re-engaging not out of FOMO, but because fundamentals finally justify it.

   

The USD 5mn to USD 2tn story: Amazon's journey from FAD to Fundamentals

Back in March 2000, Amazon’s stock had crashed 94%, from USD 113 to USD 6. Yet, inside the company, Jeff Bezos stayed unfazed. While the market panicked, Amazon’s internal metrics told a different story—customers were growing fast, repeat purchases were rising, and gross profits were improving month after month.

Bezos’s mantra was simple but profound: “The stock is not the company, and the company is not the stock.” He knew the market’s short-term didn’t matter; what mattered was building long-term through fundamentals — customer experience, efficiency, and sound unit economics.

That focus transformed Amazon. During its pre-profit years (1997–2015), Amazon’s market cap grew more than 200×, as losses narrowed and investors began to see a clear path to profitability. Once profits became steady, the explosive multibagger phase was behind it.

Platforms Life Cycle

The lesson: The biggest value creation in platform businesses happens before large profits appear, when losses are narrowing and smart investors start believing in the path to profitability.

Why we believe these businesses are investable now?

What we learned from the global perspective of Amazon this pattern is now visible in India. Zomato was re-rated once losses shrank, even before PAT turned positive. PB Fintech’s stock surged when contribution margins flipped, well before reported profit. Paytm’s valuation recovery began the moment EBITDA went positive, not after its first PAT-positive quarter. The “multibagger phase” coincides with declining burn.

With these network effects deepening, dislodging the leaders is becoming harder. Just as critical, valuations have corrected to levels that make long-term entry far more attractive than they were at the height of the 2021 frenzy. Put simply, these companies have moved from being stories powered by hype to businesses backed by fundamentals. The journey from Fad to Fundamentals is now visible.

In every cycle, there is a moment when noise gives way to signal when excitement is replaced by evidence. We believe India’s new-age platforms are at exactly that moment.