Ratan Tata Makes A Partial Exit From Upstox, Startup Buys Back 5% of Tata’s Stake

Manvendra HadaOctober 4, 2024

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Three points you will get to know in this article:

Upstox stated that it bought back 5% of Ratan Tata’s investment in the broking platform.
The startup stated that Tata had registered a “23,000% return on the original investment” made in it 2016.
Earlier this year, Upstox stated that it became profitable in FY23 and posted a consolidated profit of INR 25 crore.

Upstox Buys Back 5% of Ratan Tata’s Stake, Deal Remains Undisclosed

Ratan Tata, chairman emeritus of Tata Sons, has largely exited broking platform Upstox with 10X gains following the startup’s 5% stock buyout.

Without divulging the specifics of the transaction, Upstox stated in a statement that Tata had earned a “23,000% return on the original investment” made in 2016, based on the startup’s last valuation of $3.5 billion.

Upstox cofounder Kavitha Subramanian commented on the situation, saying, “We believe that everyone, not just the privileged few, deserves the opportunity to grow their wealth. Our objective is to provide high returns for all our investors, and we are pleased to announce that we are able to refund a portion of Mr. Tata’s investment.”

Ratan Tata’s Investment in Upstox and His Other Investments

Tata purchased a 1.33% share in Upstox when he invested in the company in 2016.

It is worth noting that Tata has been a significant investor in Indian startups. In addition to Upstox, he has worked with Ola, CarDekho, and Lenskart, among others.

Following Tata’s investment, Upstox secured $50 million in two additional funding rounds from Tiger Global in 2019 and 2021.

Upstox’s History, Revenue, Profit, Latest Developments

Shrini Viswanath, Raghu Kumar, and Ravi Kumar established RKSV Securities, which owns Upstox, in 2008. It began as a proprietary trading firm but expanded into retail brokerage with the development of the Upstox platform in 2012. It presently claims to have a subscriber base of over one crore Indians.

Earlier this year, Upstox said that it would become profitable in fiscal year 2022-23. The firm made a consolidated profit of INR 25 crore in FY23. Operating revenue increased 44% to INR 1,000 crore from INR 765.6 crore in FY22.

Upstox has yet to declare its financial results for the previous fiscal year.

In May, Upstox entered the insurance distribution business. It now provides term, motor, health, and personal accident insurance through its platform.

Upstox’s Competitors

Upstox competes with companies such as Groww and Zerodha in the country’s developing investment technology market. Both of its arch competitors recently announced financial results for fiscal year 24.

While Groww’s operating revenue increased by 123% year on year (YoY) to INR 2,899 Cr, Zerodha generated INR 8,320 Cr during the fiscal year under review. Groww recorded a 4X YoY increase in net profit to INR 297.8 Cr in FY24, whereas Zerodha’s earnings increased 61% to INR 4,700 Cr.