Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning, folks. 🙏

Today we’re diving into -
- Zerodha’s fast-track to a $1bn brokerage,
- Dream11’s tax bill that’s worth 40% of it’s business,
- And the hottest new AgriTech startup.

Our read time today is 4 minutes and 38 seconds - faster than UPI killed the 1Rs toffee industry…

Let's dive in. 👇

Market Vibe Check

Zerodha zones in on the billion-dollar mark. 💰

TLDR -
- Zerodha revenues grew to $825mn, PAT crossed $400mn.
- They’re still the market leader with 25% share, but might be outpaced by Groww soon.
- Profit margin before tax is 70%, and after tax is 58%. Killer.

Brokerage is a brilliant business, and Zerodha is making BIG bucks.

Their revenue grew almost 40% last year to a neat $825 million.

Market share crossed the 25% mark and is sitting at a pretty hefty 6.2 million users.

Brokerage as a business is super-high margin, since your operating costs are negligible, which means that even AFTER taxes and depreciation, they’re left with a stunning 60% profit.

And since Zerodha was entirely bootstrapped (read: 100% of shares owned by founders), they’re making multiple millions a year.

As a rule of thumb, $100mn in profit >>> a $1 billion valuation.

One is cash in hand, the other is numbers on paper.

Real-money gaming startups go through a tax nightmare. 😱

TLDR -
- Government is making Dream11 pay a $2.6bn tax bill on ALL past transactions - when Dream11 is worth just $8bn.
- They just introduced 28% tax on real-money gaming, but are now asking for that tax to be paid on transactions which occurred many, many years ago.
- Dream11 EBITDA projections went $400m → close to breakeven

India’s tax laws are ABSURD.

Earlier this year, government decided to slap a 28% tax on real-money gaming companies - things like fantasy cricket, teen patti, horse racing games, etc.

That’s fair enough - but they’ve come after Dream11 with a $2.6 BILLION tax bill on ALL past transactions.

This is pretty silly, and it’s called retrospective taxation.

In other words, if you start a steel trading business today, and in 10 years the government decides a 50% tax on steel, you will have to pay that 50% tax on all profits made in the 10 years prior.

Dream11 obviously doesn’t have the cash-on-hand to pay for this, and they’ve cut their EBITDA target from $400mn to under breakeven.

Sudden volatility from policymakers is never a great thing, regardless of who does it.

Acchi khaasi company ki kismat raat-o-raat badal gayi… 💀

Agritech startup Vegrow looks at a $40mn cash infusion. 🚀

Singapore investment powerhouse GIC is gonna be giving a $40mn boost to desi B2B startup Vegrow.

There’s been a sudden surge in startups that act as an aggregator between farmers and buyers, given the sheer number of agriculture businesses which exist in India.

They all need a platform to transact, since farmers are often worried that no one will buy their produce, and suppliers are also worried that they won’t have enough to sell.

Super encouraging stuff.

In other news… ☕

FTC points a finger at Amazon for “abusing power” (FT)

BYJU’s plans to fire over 5,000 people at once (Mint)

OpenAI seeks a $80-90 billion valuation (TC)

Apple’s India manufacturing plant gets set on fire (Inc42)

Hotshot Morgan Stanley MD with $850bn of deals under his belt leaves (BBG)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it. Have a mauj-masti filled day.

Lots of ❤️,

Team Cutting Chai