‘If there is no greed’: Zerodha founder doubts valuation of the sector

Kamat says that high valuations of brokerage firms are a result of good and consistent performance of the market. “If people are not making money or there is no greed, the activity usually falls off a cliff,” the CEO of India’s leading stockbroker said on Friday.

In a series of tweets, Kamat cited an old post zerodha, saying how difficult it is for an Indian brokerage to survive and make money as compared to American brokerages like Robinhood.

Robinhood is a US-based financial services company, a leader in introducing commission-free trades of stocks and exchange-traded funds.

However, a recent JPMorgan report cited by Kamath said Robinhood shares are trading below its post-IPO high of $56.

The report claims that the company’s shares could drop as much as 20% of their value by the end of the year. It is also the only broker on Wall Street with a “sell” rating on Robinhood shares. There has also been a 78% drop in app downloads and a 40% drop in active users as compared to the previous quarter.

“And it is still a bull market, just the market has gone down in the last few months. Even the best of the best products and low prices won’t help.” Kamat insisted on his point.

But Robinhood has a crypto wild card which Indian brokerages do not enjoy as such. He says the share price would have fallen on this data.

Sharing another old post, titled “Can Indian Brokerage Survive“? Kamath highlights how difficult it is for Indian brokerages to make money as compared to US brokers, which are still good.

Kamath said in that old post that US brokerage firms may face this zero-commission attack as they have multiple earning modes as compared to their Indian counterparts.

Concluding the tweet thread on the issue, the Zerodha CEO also said that analysts should not assume that the growth rate will remain forever, it will depend on the retail customers, which at times are quite unpredictable. can be.

“I don’t understand the other sectors as well. But while brokerages globally are relying on retail clients to make money, there are crazy valuations taking place on the assumption that the recent growth rate will last forever… I Constantly asking myself, WTH is the world smoking, Kamath quipped.