Zerodha CEO addresses overblown valuation speculation, emphasizes resilience and diversification for long-term growth strategy.
Following Zerodha's recent announcement of a 39% increase in profit after tax, CEO Nithin Kamath addressed the ongoing speculation surrounding the platform's valuation. He emphasized that many assumptions about Zerodha's valuation are inflated and not in line with reality.
Kamath acknowledged that Zerodha's core team has never been preoccupied with notional valuations because they can fluctuate with market conditions. Instead, their focus has always been on building a resilient business that doesn't depend on external capital.
Kamath further explained that dwelling on ever-changing valuations is a distraction. The team at Zerodha has been prepared for potential market downturns, recognizing that a significant drop in activity and revenue could occur if markets decline rapidly. Such fluctuations are beyond their control.
Zerodha is actively diversifying its offerings through initiatives like Rainmatter, public holdings, investments in AMC (Asset Management Company) business, insurance advisory (Ditto), and loan against securities (Zerodha Capital). While these businesses currently contribute a small portion of revenues, they are expected to grow and support long-term growth.
Kamath highlighted the challenges of achieving rapid growth, given Zerodha's core philosophies such as no spam, no revenue or sales targets, and no aggressive customer data tracking. He believes that these principles are the foundation of their success.
Regarding Zerodha's valuation, Kamath stated that their long-term growth projection is in the range of 10 to 15%, which is how they value themselves. This valuation is based on earnings (PAT) and falls within the range of around Rs 30,000 crores, rather than the much higher estimates seen online.
In contrast Zerodha recorded a Profit After Tax (PAT) of Rs 2,094 crore for the last financial year (2022-23). Additionally, their revenue increased by 38.5% to Rs 6,875 crore in FY23 from Rs 4,964 crore the previous year.
Kamath attributed this growth to the significant interest in the markets, particularly in the futures and options (F&O) segment. Zerodha, based in Bengaluru, manages approximately Rs 3 lakh crore worth of customer assets and boasts an active client base of 6.3 million as of August.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Nithin Kamath")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}