Zerodha's revenue, profit shoot up; New 'angel tax' rules for valuing startups

Hello,

Online real-money gaming firms are under the taxman’s scanner. 

The Directorate General of GST Intelligence (DGGI) has reportedly sent pre-show cause notice to several RMG firms over GST dues of about Rs 55,000 crore. In fact, a GST notice of Rs 25,000 crore was sent to fantasy platform Dream11.

Elsewhere, Nuvama Wealth Management, formerly Edelweiss Securities, debuted on the stock market at Rs 2,750 at the NSE. At the recently-concluded TechSparks 2023, Anshu Kapoor, President and Head, Nuvama Asset Management, spoke about the company’s plans to invest in early-stage startups in the near future. 

Check out the entire TechSparks coverage here.

Meanwhile, around 129 Indian startup founders, including Zerodha's Nithin Kamath, Paytm’s Vijay Shekhar Sharma, and PhonePe's Sameer Nigam, have urged TRAI to maintain net neutrality principles. In a joint letter, they expressed concerns about overregulating internet services as OTT services and placing them under the same framework as traditional telecom providers

ICYMI: There is AI in your drink. Earlier this month, Coca-Cola launched a new flavour that was co-created with humans and artificial intelligence, called the Coca-Cola Y3000. 

Incidentally, this isn’t even the first time a company has incorporated AI’s input in its food products. In April, AB InBev’s Beck’s launched a ‘futuristic beer’ named Beck’s Autonomous, which was selected by AI. 

In today’s newsletter, we will talk about 

• Zerodha's revenue, profit shoot up
• New 'angel tax' rules for valuing startups
• OYO on the brink of profitability

Here’s your trivia for today: Which is the longest-running theatrical release in film history?

Fintech

Zerodha's revenue, profit shoot up

Online stock broking platform Zerodha reported a 38.5% jump in its revenue to Rs 6,875 crore in FY23. Its profit after tax stood at Rs 2,907 crore—a 38.8% rise from Rs 2,094 crore earned in the previous fiscal.

“We continued to see phenomenal growth even in FY 22/23. That said, the business has plateaued in terms of revenue and profitability this financial year until now,” Co-founder and CEO Nithin Kamath wrote in the company’s blog post.

Decoding growth:

• Zerodha has 12 crore demat accounts (non-unique) in India. NSE active client data indicates three crore Indians traded once a year (unique) on the exchange.
• The startup’s overall assets under management total Rs 3 lakh crore, which Kamath highlighted puts it in a comfortable position. 
• On SEBI's consultation paper, Kamath said any regulation on finfluencers could also impact Zerodha’s referral and partner programme. 

Funding Alert

Startup: Pilgrim

Amount: $20M

Round: Series B

Startup: Legistify

Amount: $4M

Round: Series B

Startup: Raptee Energy

Amount: $3M

Round: Pre-Series A

Investment

New 'angel tax' rules for valuing startups

As per the Central Board of Direct Taxes' recently notified rules, the valuation of equity and compulsorily convertible preferable shares (CCPS) issued by startups to resident and non-resident investors can also be based on the fair market value of unquoted equity shares.

Key points:

• The amended rules retain the five new valuation methods proposed in the draft rules for consideration received from the non-residents.
• YourStory earlier reported that the biggest bugbear for the Indian startup ecosystem was how the valuation was perceived by the government authorities. AKM Global Tax Partner Amit Maheshwari says the angel tax rules have taken care of CCPS valuation mechanism.
• Amendments to Rule 11UA of I-T rules also offer taxpayers flexibility, incentivise VC investments, facilitate investments from notified entities, and encourage foreign investments, as per Nangia & Co LLP Partner Amit Agarwal.

Hospitality

OYO on the brink of profitability

OYO is set to report its first-ever profit after tax of over Rs 16 crore in the current quarter ending September. 

"As per the current trajectory in this quarter, Q2 FY24 will mark our maiden profitable quarter with a projected profit after tax (PAT) of over Rs 16 crore," Founder and CEO Ritesh Agarwal said in an email to the company's leadership.

Path to profitability:

• The company's revenue from operations stood at Rs 5,463 crore in FY23, up from Rs 4,781 crore in FY22, marking a nearly 14% increase.
• Agarwal said OYO rationalised the number of hotels in FY23 to 12,938 from 18,037 in FY22.
• OYO Parent Oravel Stays Ltd clocked an adjusted EBITDA of Rs 175 crore in the first quarter of FY24 between April and June, he noted in the email.

News & updates

• Compliance: The majority of global firms, or 75%, are currently not adequately prepared for environmental, social, and governance (ESG) data assurance to meet new regulatory requirements, as per a KPMG report. It also found that larger companies (above the $10-billion category) tend to be more ESG assurance-ready.
• AI speaks: OpenAI announced ChatGPT will get voice and image-based chatting features. The voice feature will allow users to engage in dynamic conversations with ChatGPT, making it a conversational companion. This feature allows for a wide range of applications, including requesting bedtime stories.
• On shaky ground: Shares in China's Evergrande have slumped as the property developer's mainland unit Hengda Real Estate has defaulted on 4 billion yuan ($547 million) of debt. Evergrande's stock has fallen by more than 25% this week.

Which is the longest-running theatrical release in film history?

Answer: The Rocky Horror Picture Show. Released in 1975, the movie's first run lasted 118 weeks and it continues to play in cinemas to this day.

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