India's Used-Car Unicorns: Valuation Rationalization and Market Entry Timing in the IPO Race

India's used-car unicorn ecosystem is at a pivotal juncture, with CARS24, CarDekho, Spinny, and Droom preparing for initial public offerings (IPOs) in the next 12 to 18 months. These companies, valued collectively at over $10 billion in recent years, are now navigating a dual challenge: rationalizing their valuations in a post-2024 IPO slowdown and timing their market entry amid macroeconomic headwinds.

Valuation Rationalization: From Burn Rate to EBITDA Positivity

The path to IPO readiness for these unicorns hinges on restructuring operations to align with investor expectations. CARS24, valued at $3.2 billion in 2021 but posting a 5 billion rupee loss in FY24Used-Car Unicorns Slim Down to Raise $1 Billion Via India IPOs^[1], has slashed costs by shutting down non-core ventures like Inspare and FourDoor and reducing its workforceUsed-Car Unicorns Slim Down to Raise $1 Billion Via India IPOs^[1]. Similarly, CarDekho is merging its insurance arm, InsuranceDekho, with RenewBuy to streamline operationsUsed-Car Unicorns Slim Down to Raise $1 Billion Via India IPOs^[1], while Spinny has slowed expansion to focus on capital efficiencyUsed-Car Unicorns Slim Down to Raise $1 Billion Via India IPOs^[1]. Droom, aiming for EBITDA positivity by FY26Droom IPO: Used Car Marketplace Plans INR 1,000 Cr …^[4], has cut losses by 54% in FY23 and restructured to prioritize premium and luxury vehiclesDroom IPO: Used Car Marketplace Plans INR 1,000 Cr …^[4].

These moves reflect a broader trend of “valuation rationalization” in the Indian startup ecosystem. As of 2024, two-tenths of India's 117 unicorns had fallen below $1 billion valuationsCARS24 preparing to float IPO to tap growth opportunities – Co-founder^[2], signaling investor skepticism toward pre-revenue or high-burn models. For used-car unicorns, the key to justifying valuations lies in demonstrating unit economics, such as CARS24's new app feature, Orbit, which integrates financing and insurance to boost customer lifetime valueCARS24 preparing to float IPO to tap growth opportunities – Co-founder^[2].

Market Entry Timing: Navigating a Cautious IPO Climate

While 2024 saw India lead global IPO activity with over $10 billion raisedIndian Startup IPO Tracker 2025^[3], 2025 has been marked by caution. Only five Indian startups have listed so far in 2025, despite 26 filing draft prospectuses with SEBIIndian Startup IPO Tracker 2025^[3], as macroeconomic pressures and geopolitical tensions dampen investor appetite. This environment forces used-car unicorns to time their entries strategically.

Droom's planned November 2025 IPODroom IPO: Used Car Marketplace Plans INR 1,000 Cr …^[4], for instance, leverages domestic-focused investment trends, with a pre-IPO round targeting INR 200 crore ($23 million) from Indian family officesDroom IPO: Used Car Marketplace Plans INR 1,000 Cr …^[4]. CARS24 and CarDekho, meanwhile, are adopting a wait-and-watch approach, assessing investor sentiment before filingUsed-Car Unicorns Slim Down to Raise $1 Billion Via India IPOs^[1]. The used-car market itself offers a tailwind: India's second-hand car sales ratio has risen from 1.2 to 1.65 per new car sold in the past decadeUsed Cars: Used car marketplace 'Droom' plans to come up with …^[5], and the market is projected to reach $73 billion by FY28Droom IPO: Used Car Marketplace Plans INR 1,000 Cr …^[4].

Investment Implications: Balancing Optimism and Caution

For investors, the IPOs of India's used-car unicorns present a high-risk, high-reward proposition. On one hand, the sector's growth potential—driven by urbanization, digital adoption, and a $100-billion projected used-car market by 2035CARS24 preparing to float IPO to tap growth opportunities – Co-founder^[2]—is compelling. On the other, the companies' path to profitability remains unproven. CARS24's FY24 lossUsed-Car Unicorns Slim Down to Raise $1 Billion Via India IPOs^[1] and Spinny's capital-seeking effortsUsed-Car Unicorns Slim Down to Raise $1 Billion Via India IPOs^[1] highlight operational challenges.

A critical factor will be how these firms price their IPOs. Droom's target valuation of $1.2–1.5 billionDroom IPO: Used Car Marketplace Plans INR 1,000 Cr …^[4] appears aggressive given its FY23 performance, but aligns with the broader unicorn market's $385-billion valuation in 2024Indian Startup IPO Tracker 2025^[3]. Investors must weigh whether the companies' restructuring efforts will translate into sustainable margins or merely delay inevitable valuation corrections.

Conclusion

India's used-car unicorns are betting on a strategic mix of operational discipline and market timing to navigate the IPO landscape. While their restructuring efforts signal a shift toward profitability, the success of their public market debuts will depend on macroeconomic stability, investor confidence, and the sector's ability to scale efficiently. For now, the road to $1 billion in combined IPO proceeds remains paved with both opportunity and uncertainty.