Exclusive: Zerodha creates new ESOP plan worth Rs 100 Cr

Stockbroking app Zerodha is making this Diwali special for its employees as the company has created a new employee stock options (ESOP) plan. With this, the company joins the list of several growth-stage companies such as Paytm, Swiggy and Rivigo among others who have either expanded or created a new ESOPs pool.

Zerodha is the largest stockbroking app for retail trades in India with 6 million users.

The Bengaluru-based company has allocated 7,00,000 options under its fresh ESOPs Plan 2021, according to regulatory filings with the Registrar of companies (RoC). As per Fintrackr’s estimates, the new pool is worth a little over Rs 100 crore.

The plan comes on the back of its Rs 65 crore worth ESOPs buyback. While the size of the potential buyback will be Rs 200 crore, according to Zerodha, this year it will buy options at Rs 1,400 each.

The price of each option will jump 2X as compared to last year. The company had bought options at Rs 700 in June last year. “Since we don’t intend to list or get outside investors, the buyback is done as options in itself,” said Zerodha’s spokesperson in a response to Entrackr queries.

When the buyback takes place, it will value Zerodha at $2 billion.

Unlike other startups, Zerodha is purely bootstrapped and a profitable unicorn. According to its co-founder and chief executive Nithin Kamath, the company has registered an over two-fold growth in profits to Rs 1,000 crore in FY2o21.  

The firm has 'self-assessed' its valuation as it is yet to raise any external funding. It has also applied for an AMC (asset management company) license and plans to allow clients to borrow against their shares at some point. 

While the company is yet to file annual financial statements for FY21, as per Fintrackr, it posted operating revenues of Rs 1,094 crore with Rs 442 crore profit in FY20.

Zerodha’s co-founders have also emerged as one of the highest-paid executives in the Indian startup ecosystem. The company had approved a remuneration up to Rs 100 crore to Nikhil Kamath, Nithin Kamath and his spouse Seema Patil.

Entrackr had exclusively reported the new remuneration structure in May. Zerodha competes with Tiger Global backed Groww, Upstox, IndMoney and others.