Zerodha IPO News: Zerodha's interest in an IPO would come from being at the forefront of the industry, said Nithin Kamath, Zerodha's founder and chief executive officer (CEO) in an recent interview with CNBC-TV18. The senior leadership team of the Zerodha discussed their stance on the potential of going public in light of the recent surge in IPOs from companies like Hyundai and Swiggy.
Zerodha's current approach involves establishing diverse business ventures and exploring the possibility of an IPO once there is more predictability.
"The only reason we would consider an IPO is because we are at the forefront of the industry. We ask every company to create wealth. The plan as of now is we build a bunch of businesses, build some diversification, and then maybe once there's predictability, then we can decide,” said Kamath.
When questioned about the importance of trust and credibility for a company from the perspective of retail investors, Nikhil Kamath, the Co-founder & Chief Financial Officer (CFO), mentioned that as a publicly traded company, there are limitations on what can be disclosed and what cannot be disclosed.
“If you look at Zerodha, and you look at Nithin tweets, a lot about the numbers and predictability and stuff like that, I would argue that as a listed company, he can't go out on ‘X’ and say it looks like profitable, right? So maybe there are other ways to build trust which are not necessarily IPO. They're more nuanced in nature, but they're also more honest by virtue of that,” explained Nikhil Kamath.
When the CNBC-TV18 media representative questioned the team as a whole, was it necessary to vote in favour of an IPO soon or not? They were all three leaning away from an IPO.
“I would be conflicted because the pros and cons, I think, are very close to being equal. I would say 50:50 more leaning towards no IPO,” said Nikhil Kamath. Similarly, Dr. Kailash Nadh, chief technology officer (CTO) said that he would lean heavily towards no IPO.
Kailash mentioned the importance of asking basic common sense questions. When an organisation wants to raise capital, why do they go for an IPO?
"It's fortunate that we don't require capital, and it's our freedom and liberty that truly enable us to succeed in our endeavours. That's a big factor for me personally—the innovation that we do, the decisions that we take. So for me, unless, like Nikhil is saying, unless there's a pros and cons that outweigh each other significantly, they flip, I'd be I'd heavily lean towards not, heavily lean towards not," added Nadh.
Nithin Kamath ultimately mentioned that the sole additional reason for us to go public is if the capital market regulator Securities and Exchange Board of India (SEBI) requires us to do so, aside from the fact that we are stock brokers.
In discussing the new SEBI regulations, Nithin Kamath emphasized that the regulator, particularly SEBI, is requiring brokers to generate revenue solely from brokerage and not from any other sources. Given that the entire industry is accustomed to earning in a certain manner, which encompasses all aspects, this will present a significant challenge.
“Now, essentially, we have to figure some way to kind of get over it, as in, we potentially have to up the brokerage,” said Nithin.
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