Zerodha co-founder Nithin Kamath has highlighted Gujarat’s strong participation in Initial Public Offerings (IPOs), noting that the state leads the country with around 40% of the total participation. Despite having only 9% of the investor customer base, Gujarat has emerged as a dominant force in both retail and High Net Worth Individual (HNI) categories.
Strong Investor Presence in Gujarat
Kamath shared these insights in a post on X (formerly Twitter), where he cited a study by the Securities and Exchange Board of India (SEBI) on IPO investor participation. According to the SEBI report, Gujarat has the highest number of retail investors, accounting for 39.3% of the total, followed by Maharashtra at 13.5% and Rajasthan at 10.5%.
Top States in IPO Participation
The report also noted that 70% of IPO investors come from the top four states: Gujarat, Maharashtra, Rajasthan, and Uttar Pradesh. In the Non-Institutional Investors (NII) category, investors from Gujarat secured 42.3% of the total allotment, with Maharashtra and Rajasthan following at 20.4% and 15.5%, respectively.
Buoyant IPO Market
SEBI’s report observed that the IPO market has been buoyant from FY22 to FY24, largely due to high retail participation. This period saw a significant number of IPO applications and oversubscriptions. Out of 144 IPOs listed between April 2021 and December 2023, 75% delivered positive returns. Notably, 92 IPOs were oversubscribed by more than ten times, while only two were undersubscribed.
Impact of Demat Accounts and RBI Guidelines
The rise in demat accounts after the COVID-19 pandemic has also contributed to the surge in public issues. Almost half of the demat accounts applying for IPOs during this period were opened post-pandemic. However, after the Reserve Bank of India’s guidelines on IPO financing by Non-Banking Financial Companies (NBFCs), the oversubscription rate in the NII category dropped from 38 times to 17 times.
Kamath’s remarks highlight the enthusiasm of investors in Gujarat, where IPO participation seems to be ingrained in the local investment culture.
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