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Zerodha's Nithin Kamath On Whether Paytm, Policybazaar IPOs Will Taste Zomato-Like Success

Zomato’s stellar market listing has got a lot of Indian startups excited, according to Zerodha Broking Ltd.’s Nithin Kamath.

<div class="paragraphs"><p>Nithin Kamath, founder and chief executive officer of Zerodha Broking. (Photographer: Karen Dias/Bloomberg)</p></div>
Nithin Kamath, founder and chief executive officer of Zerodha Broking. (Photographer: Karen Dias/Bloomberg)

Zomato’s stellar market listing has opened the door for “startups which are growing fast, but not yet profitable”. But not everyone should expect an encore, according to Zerodha Broking Ltd.’s Nithin Kamath.

“Zomato is the first loss-making business that has listed and the stellar debut they've had has meant other companies which are growing fast but not yet profitable, they're all excited to come list in the markets,” the chief executive officer of the online brokerage told Bloomberg Television in an interview.

Factors like duopoly in online food ordering, a large target market and the current bull market phase helped Zomato list at a higher valuation, Kamath said. "There are sectors with a lot more competition and where the target market isn’t as big," he said. "I don’t know if startups belonging to such sectors can all expect to list with the kind of gains that Zomato did."

In the second half of 2021, Ant Group-backed Paytm and SoftBank-backed Policybazaar are looking to tap the markets to raise funds. Paytm, according to its draft red herring prospectus, plans to raise as much as Rs 16,600 crore and Policybazaar may net up to Rs 6,018 crore through its initial share sale.

“Paytm is in a very competitive market. It's a large target market, but it's a competitive market,” he said, adding Policybazaar is a leader in its segment. “There isn’t really a close competition so they'll probably get a lot of valuation premium because of being a large leader in their segment.”

Kamath ruled out plans for a Zerodha IPO. “Luckily for us we're bootstrapped. We haven’t raised any external capital so there isn’t any pressure to give exit to any outside investor and as a business we're profitable," he said. "There isn’t money required to grow the business fast.”

Watch the interaction here:

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