Zerodha is valued at Rs 30,000 Cr, says CEO Nithin Kamath

Discount brokerage firm Zerodha is valued at Rs 30,000 crore, said the company's Co-founder and CEO Nithin Kamath.

Kamath posted on social media platform X, formerly Twitter, and said: "Every time our financials are out, there is a lot of speculation about Zerodha's valuation. It might sound counterintuitive for me to say it, but most assumptions, I think, are way higher than reality."

"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."

"We value ourselves in the range of 10 to 15 times our earnings (PAT). We think that at the scale we are at, we can potentially grow by 10 to 15 percent in the long run, factoring in the drawdowns that are guaranteed," Kamath wrote.

The Bengaluru-headquartered company's profit after tax (PAT) grew nearly 39% to Rs 2,907 crore in FY23 from Rs 2,094 crore in the previous fiscal year. Revenue grew over 38% to Rs 6,875 crore in FY23 from Rs 4,964 crore during the 2022 fiscal year.

Kamath also said, "Focussing on ever changing valuations is a distraction. The focus has always been on building a resilient business, which means never having to rely on external capital."

The quantum of profits is the luck of the draw and is based on market conditions, remarked Kamath, adding that stockbroking and capital market businesses are cyclical and high-risk.

"Almost every bull run in the markets creates the illusion that somehow participation and activity will keep going up forever. 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%," he posted.

Speaking about diversification in public holdings, Kamath wrote, “We are trying to diversify with everything we are doing in Rainmatter, our public holdings, and with large investments in the AMC business, insurance advisory, and loan against securities. Today, the revenues from these businesses are not significant, but hopefully, they will go up and help us maintain long-term growth."