Zerodha Valued At Rs 30,000 Crore, Says Nithin Kamath

Zerodha Broking Pvt. is valued at around Rs 30,000 crore, or $3.6 billion, much lower than market guesstimates, according to Nithin Kamath, co-founder of India's largest broker.

"Every time our financials are out, there is a lot of speculation about Zerodha's valuation," said Kamath, also the chief executive officer, in a post on X (formerly Twitter). "It might sound counterintuitive for me to say it, but most assumptions, I think, are way higher than reality."

Kamath's clarification on the valuation of Zerodha, India's No. 1 brokerage by revenue and profitability, came two days after the company released its earnings. Its profit surged 38% to Rs 2,907 crore in FY23.

Factoring in the market drawdowns that are bound to occur, Zerodha can potentially grow by 10-15% in the long run, he said. "So if 10 to 15% is the long-term growth, we value ourselves in the range of 10-15 times our earnings (PAT)."

Zerodha values itself at the "lower end when near bull market highs", Kamath said. "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 said Zerodha, to cement the 10-15% and grow further, is investing in several businesses. "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."

Hence, it has invested in Ditto, an insurance advisory startup, and provided loans against securities via Zerodha Capital, apart from its core broking business. "Today, the revenues from these businesses are not significant, but hopefully, they will go up and help us maintain long-term growth."

Zerodha, a discount broker, values itself more than its rivals. Groww was valued at $3 billion in a $251 million fundraise in May this year, while Upstox is valued at around $3.4 billion as of May 2022, according to Tracxn.

Alongside Tuesday's earnings, Zerodha said its total assets stand at about Rs 3 lakh crore, which puts it ahead of other retail-only brokers.