Will Zerodha come out with an IPO: Nithin Kamath says ‘most companies forced...’

Nithin Kamath emphasizes long-term sustainability over IPOs, citing unpredictable revenue. He believes entering public market would shift focus.

Zerodha founder Nithin Kamath said that his company has stayed away from going public despite soaring valuations which an IPO could bring. Reflecting on the challenges of revenue predictability, he said, “An IPO is not the end, but rather a new beginning. When retail investors enter the cap table, the company should be able to predict revenue to some extent. In the last 14 years, I have not once been correct in predicting revenue growth and dips.”

Zerodha's Nithin Kamath shares concerns about IPOs, stressing the need for revenue predictability. He believes the company's long-term stability is at risk if it prioritizes short-term gains driven by investor expectations. (X/Nithin Kamath)

Zerodha is prioritizing long-term sustainability over chasing inflated valuations, he said, asserting that the company's business may appear stable based on its financials but it could change rapidly due to shifts in regulation or market conditions.

He said, “Our business, while it looks good based on financials, can change in a heartbeat due to a change in regulation or markets taking a turn for the worse. We need to do more regarding revenue predictability, and it is impossible to do it just as a brokerage business."

He also said that Zerodha's focus is more long term because “why take on the burden of expectation from investors when there is nothing strategic or material to gain for the business? Once listed, most companies are forced to shift their focus to growing quarter after quarter at all costs.”