If Zerodha Broking Ltd. co-founder Nithin Kamath is asked to value rival brokerage businesses, he is unlikely to oblige? But his valuation model for Zerodha, if applied, will simply bring down the valuations of listed peers by a fourth.
"We value ourselves in the range of 10–15 times our earning (PAT)," Kamath had said. The discount broking service reported a profit-after-tax of Rs 2,907 crore for the fiscal ending March 2023.
BQ Prime applied Zerodha's valuation methodology to some of the leading brokerages and here's what we found out.
JM Financial Ltd., which is valued at Rs 24,742 crore, will be just Rs 6,164 crore, and Anand Rathi Wealth Ltd. goes from Rs 7,090 to Rs 1,717.
And based on comparative enterprise valuation for listed brokers based on this model, Zerodha takes the top spot.
The country's largest broking service by number of active clients reported a valuation of Rs 30,000 crore, much below market estimates.
Enterprise values for companies like JM Financial and Anand Rathi Wealth are currently above 40 times their profit for the previous fiscal, while Zerodha's recently released valuation implies a multiple of 10.32.
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