Stock broking company Zerodha has valued itself at $3.6 billion or Rs 30,000 crores, according to the company’s co-founder and chief executive officer Nithin Kamath. This is an almost 80% spike in its valuation from a self-assessed valuation of $2 billion when the firm announced a Rs 200 crore ESOP buyback plan in 2021.
Now, Zerodha is the highest-valued startup in the stock broking space as its peers Upstox and Groww are currently valued at $3.4 and $3 billion respectively.
Zerodha’s valuation hinges exclusively on the company’s net profits, as per Kamath. According to him, the company’s worth has been calculated at a multiple of 10-15 times its net annual profits during the previous 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).
While the company’s growth in FY23 didn’t grow as it did in the previous fiscal year (FY22), Zerodha registered a 38.5% growth in its scale to Rs 6,875 crore during FY23 from Rs 4964 crore in FY22. The firm’s profit also grew 38.5% to Rs 2,907 crore in the fiscal year ending March 2023.
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.”
Among the stockbroking platforms, Zerodha has the highest monthly active users of 6.3 million, according to data sourced from NSE. Groww is getting closer with 6.2 million active users followed by Angel One’s 4.3 million.