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 Kamath revealed 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.

Discount broker Zerodha has doubled its valuation to $2 billion within a year as India’s millennials took the stock market in droves. While retail investors try to ride the bull market, a significant number of Zerodha employees are on their way to becoming richer.

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).

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.


“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.

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