Zerodha’s Nithin Kamath on what youngsters can learn from today’s IPOs
- Nithin Kamath said IPOs have played a huge role in attracting new investors
Most the new investors rushing to markets in the current bull run are under 30 years and they are mainly driven by bumper initial public offerings (IPOs), especially of new-age tech companies, feels Zerodha chief Nithin Kamath.
He said this trend is a good thing for both markets and investors as youngsters have less to invest, which means they can learn hands-on and bounce back quicker in cases of losses and mistakes.
In a series of tweets, the Zerodha boss said historically, activity has always dropped sharply post serious market falls.
"Folks who have significant investments typically don't do anything in such markets. It will be interesting to see how the new young investors with small ticket sizes behave this time around," he added.
IPOs have played a huge role in attracting these new investors, said Nithin Kamath, adding that without the UPI for IPOs, it wouldn't have been possible for non-bank brokerage firms like us to tap into the markets.
"India stack has probably been responsible for a lion's share of disruption and innovation in India Fintech."
Seeking to capitalise on the IPO frenzy, Indian companies have raised $10.8 billion from IPOs this year, according to data compiled by Bloomberg. At this pace, 2021 could well surpass the record $11.8 billion mopped up in 2017.
Zomato led the digital IPO revolution, when the issue was overwhelmingly subscribed by over 38 times, encouraging new-age tech companies to come out with their primary share-sales.
Hectic fundraising through IPOs is expected in October-November, with at least 30 companies are looking to collectively raise over ₹45,000 crore through initial share-sales.
Of them, Nykaa IPO, which has received an approval from the market regulator Sebi, is seeking a valuation of ₹52,000 crore. The initial share sale comprises a fresh issue of equity shares worth ₹630 crore and an offer for sale (OFS) of 4.19 crore shares by promoters and existing shareholders. The IPO will open for subscription on October 28 and conclude on 1 November.
The price band of the public issue is fixed at ₹1,085-1,125 per share. Promoters, including founder and CEO Falguni Nayar, currently own more than 50% stake in the company. Nykaa could be an attractive option, as per analysts, for listing gains as well as investors can look at it for long-term as well.
Further, Digital payments company Paytm is coming up with what could be India's biggest ever initial share sale with the subscription opening on 8 November.
Paytm is looking to set a price band of ₹2,080 to ₹2,150 for its upcoming IPO, at a valuation of $20 billion, mint has reported earlier. The firm has increased size of its IPO to ₹18,300 crore from ₹16,600 crore. It comprises a fresh issue of ₹8,300 crore and an offer for sale (OFS) of up to ₹10,000 crore.
Companies that are further expected to raise funds through their IPOs during October-November include Policybazaar ( ₹6,017 crore), Emcure Pharmaceuticals ( ₹4,500 crore), CMS Info Systems ( ₹2,000 crore), MobiKwik Systems ( ₹1,900 crore).
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