Zerodha Valued At $3.6 Bn, Says CEO Nithin Kamath

Squashing all speculations around Zerodha’s valuation, Nithin Kamath, the cofounder and CEO of the Bengaluru-based stock broking platform, on Thursday said the firm is valued at INR 30,000 Cr, or about $3.6 Bn.

“So if 10 to 15% is the long-term growth, we value ourselves in the range of 10 to 15 times our earnings (PAT). At the lower end when near bull market highs. 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,” Kamath wrote in a post on X (formerly Twitter).

Earlier this week, Zerodha said it recorded a total income of INR 6,875 Cr during the financial year 2022-23 (FY23), an increase of 38% from INR 4,964 Cr in the previous fiscal year.

The Bengaluru-based startup generates revenue from brokerage sales, user onboarding collections, and sale of its premium tech products such as Kite Connect API. On the back of the strong growth in business, Zerodha’s net profit jumped 39% to INR 2,907 Cr from INR 2,094.3 Cr in FY22.

Kamath, in the post, said that factoring in the “guaranteed” drawdowns, Zerodha can potentially grow 10%-15% in the long run. 

Talking about Zerodha’s other businesses – fintech and health fund Rainmatter, asset management company (AMC) Zerodha Fund House, insurance advisory Ditto Insurance, and fintech platform Zerodha Capital, which provides loan against securities in demat account, Kamath said the revenue from these businesses is “not significant” currently but expressed hope that it will go up in the future, helping the company maintain its long-term growth.

It must be noted that Zerodha Fund House filed draft scheme information documents for two index funds with the Securities Exchange Board of India (SEBI) earlier this month, days after it received final approval from the markets regulator for the business.

Zerodha has tied up with smallcase for the AMC. Former Nippon India executive Vishal Jain has been appointed the CEO of the AMC business.

Zerodha competes directly against ICONIQ Growth-backed Groww and Tiger Global funded Upstox in the stock broking industry. 

While Groww was last valued at $3 Bn after its $251 Mn funding Series E funding round in March this year, Upstox was last valued at $3.4 Bn.  Zerodha’s user base stood at 6.6 Mn at the end of FY22 as against Groww’s 5 Mn and Upstox’s 4.1 Mn. 

However, as per a recent report by ET, Groww is set to overtake Zerodha in terms of active clients this month.