Nithin Kamath, co-founder and CEO of stock brokerage firm Zerodha, claims that the company is worth $3.6 billion, or Rs 30,000 crores. When the company announced a Rs 200 crore ESOP buyback plan in 2021, it had a self-assessed valuation of $2 billion, which has increased in value by almost 80%.
As opposed to its competitors Upstox and Groww, which are currently valued at $3.4 and $3 billion, respectively, Zerodha is now the most valuable startup in the stock broking sector.
According to Kamath, Zerodha’s valuation is solely based on its net profits. He claims that the valuation of the business is based on a multiple of 10 to 15 times its net annual profits from the prior fiscal year.
“… This is how we have been valuing ourselves for all buybacks (founders and team) for a while now. So ~Rs 30,000 crores and not the Rs 1 lakh to Rs 2 lakh crores some folks online were guesstimating,” said Kamath in a post on X (formerly Twitter).
Even though the company’s growth in FY23 lagged behind that of the previous fiscal year (FY22), Zerodha saw a 38.5% increase in scale, going from Rs 4964 crore to Rs 6,875 crore. In the fiscal year that ended in March 2023, the company’s profit increased as well by 38.5% to Rs 2,907 crore.
Highlighting the technicality of the stock market, Nithin further said, “…We keep discussing internally that we could see a 50% dip in activity and revenue if markets fall in no time. None of it is really under our control. And yeah, one circular is also enough to bring down our revenue by more than 50%. We think that at the scale we are at, we can potentially grow by 10 to 15% in the long run, factoring in the drawdowns that are guaranteed.”
According to data obtained from the NSE, Zerodha has the most monthly active users among stockbroking platforms with 6.3 million. With 6.2 million active users, Groww is closing the gap on Angel One, which has 4.3 million.
