Zerodha doubles its valuation to $2 billion within a year as millennials plough India’s stock markets
- Online broker
Zerodha’s valuation has doubled from $1 billion to $2 billion within a year’s time.
- The company’s founder
Nithin Kamathrevealed this while announcing a $25 million buyback of employee stock option plans (ESOP).
- The massive boom in India’s retail investors driven by millennials could be one of the reasons behind the surge in the brokerage’s valuation.
Zerodha’s founder and chief executive officer (CEO) Nithin Kamath took to Twitter to announce that his company is buying back employee stock option plans (ESOP) worth $25 million (approximately ₹181 crore).
TOP VIDEOS FOR YOU
This is Zerodha’s second ESOP buyback in as many years. Last year, the bootstrapped brokerage announced a ₹60-65 crore buyback that benefited 800 employees.
Kamath suggests a $2 billion valuation could be ‘conservative’
Kamath recognises this, and says that Zerodha’s valuation could be conservative – both at $1 billion last year and at $2 billion this year.
However, he says this is down to business risks. One of the risks associated with being a brokerage is the fall in revenues in a bear market, when investors rush to sell their holdings to avoid their investments from being wiped out.
Kamath says that even a minor bear punch could result in a 40% fall in business.
While our growth is exciting, we know that this isn’t sustainable. A broking business is an extremely high beta - h… https://t.co/5oaz1npLvU— Nithin Kamath (@Nithin0dha) 1622195430000
“Given our profitability in the last few years and price-to-equity margins, this is a fairly conservative valuation from our standpoint. We derived this by looking at our closest publicly- listed competitor ICICI Direct and thought to be valued on similar lines,” Kamath told Business Insider.
“This number could have been much higher if we had been valued as a tech firm, rather than just as a brokerage firm as people value tech businesses based on growth,” he explained further.
According to reports, Zerodha makes for 15% of the Indian retail trading volume with a customer base of 2.8 million. The average age of users is between the age bracket of 25-35.
The recent boom in retail investors – amidst a once-in-a-century pandemic – is also one of the reasons behind Zerodha’s valuation doubling in a year.
Zerodha valued itself at $1 billion, Hurun unicorn startups list bumps it up to $3 billion but founder says valuation doesn't matter
INTERVIEW: Zerodha founder defends the ‘self-valuation’ of nearly a billion dollars — and why he never raised funds from investors
Zerodha has been growing 100% month-on-month during the lockdown without any direct marketing, Nikhil Kamath tells us how
- Delhi reports its lowest daily COVID-19 cases in 104 days, records 213 single day COVID-19 cases
- Here’s how to recharge your Reliance Jio on WhatsApp
- India may classify Bitcoin as an asset class, but that may not solve the underlying problem
- Facebook rolls out new chat themes and payment options in Messenger app for US users
- Dodla Dairy's ₹520 crore IPO isn't to expand into new markets but to strengthen its foothold where it already exists