India’s red-hot IPO season has sparked massive enthusiasm among retail investors, but Zerodha founder Nithin Kamath has issued a serious warning: the frenzy around pre-IPO shares is getting dangerously irrational.
Kamath said he’s witnessing a surge of risky behaviour in the unlisted market, where buyers are aggressively chasing shares of companies yet to list — often at inflated and unjustifiable prices.
“People are blindly punting,” says Kamath
Kamath noted that pre-IPO trading is booming for all the wrong reasons. Many investors believe buying unlisted shares early will generate higher profits once the IPO opens. But according to him, most are walking into traps without understanding the risks.
He revealed that many unlisted shares are being offloaded at 100–500% mark-ups, accompanied by high commissions and completely unrealistic valuations.
When pre-IPO hype becomes a loss even before listing
Kamath reminded investors that pre-IPO does not guarantee profits — in fact, it can do the opposite.
“There have been numerous cases where IPO issue prices were lower than the unlisted share price people paid. All the ‘gains’ wiped out before the IPO even started,” he said.
This means retail buyers could lose money before the stock ever hits the exchanges.
Unlisted shares gaining unusual popularity
What concerns Kamath even more is the sudden explosion of interest. He said the unlisted market has “unexpectedly become popular,” with WhatsApp groups and online platforms aggressively pushing pre-IPO purchases to unsuspecting retail investors.
Calling the hype “crazy,” Kamath pointed out that the lack of regulation, transparency, and proper pricing makes unlisted shares one of the riskiest bets for newcomers.
A timely reminder for small investors
With several major IPOs lined up, Kamath’s message is clear: do not fall for WhatsApp forwards, pre-IPO noise, or guaranteed-profit promises.
Experts also caution that unlisted markets come with low liquidity, no price discovery, and high manipulation risk — making them unsuitable for most retail investors.
Kamath’s warning stands as a much-needed check on the euphoria surrounding India’s IPO boom.
