Zerodha plans ESOPs buyback at $2B valuation

zerodha esop buyback

Zerodha is planning another buyback for employee stock ownership plan (ESOPs) in 2021, at a valuation of $2 Bn. The company’s CEO and cofounder Nithin Kamath announced the development on Twitter on May 28.

Zerodha had executed an ESOPs buyback drive last year, where it bought shares worth INR 65 Cr at a valuation of $1 Bn. The bootstrapped startup has not raised any funds from external investors to date, as the company does not want to be restricted by investors. 

In a tweet thread published in April 2021, Kamath had said, “Our bet is that in a fight of deep pockets, the ability to do what is right for the customer will be our edge.”

In the recent tweet thread, Kamath said, “Everyone holds ESOPs & continuously gets new options too. We ran a buyback last year at a $1 Bn valuation and we will this year at $2 Bn. Maybe conservative valuations, but our business risks are high. Personally, the proudest moment in this journey.”

Besides the ESOPs buyback, Zerodha has decided to invest $100 Mn for its investment arm Rainmatter to invest in grass-roots organizations and startups working on climate change and generating green jobs. Earlier this year, the company had announced Rainmatter Climate Foundation to promote and help ideas that help protect and restore ecosystems.

An Entrackr report, citing regulatory filings, revealed that Zerodha’s board has approved a commitment to invest surplus fund of company and up to INR 1,500 Cr in other companies and businesses via loans, guarantees, or purchase of securities of any other company. 

Overall, the company has allocated $300 Mn for investments in other businesses, including the amount dedicated to Zerodha Climate Foundation.

In the financial year 2020, Zerodha had recorded a 15% year-on-year jump in its revenue. The company’s revenue stood at INR 1,093 Cr in FY20 compared to INR 950 Cr in FY19. It generated a profit of INR 443.3 Cr in FY20 and INR 350 Cr in FY19.

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