2020 is not a year Indians will easily forget. Not only did their normal ways of life get interrupted, but many lost their jobs, small businesses were hit hard, and the country entered into a recession for the first half of the fiscal year 2020.
However, the fortune of the stockbroker market was not the same – instead, it prospered and grew in conditions that have adversely affected other industries and the world as a whole. A record 14.2 million new demat accounts were opened in India in 2020. And Zerodha, perhaps one of the most sophisticated new-age trading platforms globally, has a big part to play in that.
This growth has continued in 2021 as well. As multiple app-based trading platforms have been accessible, the new generation of young, smart Indian investors has come up. This has, in turn, seen a massive increase in stock trading in the country and benefited stockbroking platforms like Zerodha, which had a magnificent 2021.
The Bengaluru-based Zerodha — which by the way hasn’t raised any external capital till date — clocked a year-over-year jump of over 164% in profit to pocket ₹1122 crores in FY21. Its revenue grew by 190% from ₹938.45 crores in FY20 to ₹2729 crores in FY21. Zerodha’s growth is also highlighted in the number of active clients it acquired in FY21 – the number grew from having 14.14 lakh active clients in FY20 to nearly 34 lakh active clients in FY21. So you see, last year was a blockbuster for Zerodha in terms of both profit and revenue, and acquiring new clients.
Zerodha has been operating since 2010, and ten years later, it entered the unicorn club, no capital raise being the stress point here. Founded by the now billionaire brother duo of Nithin Kamath and Nikhil Kamath, the company offers financial services such as retail brokerage, currencies and commodity trading, equity, bonds, and mutual funds. Today, it is the largest retail stockbroker in the country, and is entering newer categories such as wealth management, among others.
It saw nearly 82.5% of its operating revenue from the “sale of services,” including brokerage fees and the sale of tech products such as Kite, its flagship trading platform. In total, these amounts grew from ₹718 crores in FY20 to ₹2252 crores in FY21, a growth of 3.1 times.
The remaining 17.5% comes under “miscellaneous other operating revenues.” This includes the interest on financial securities and margin interest charged by the company from its clients. These amounts grew by nearly 2.2 times from ₹220.05 crores in FY20 to ₹476.4 crores in FY21.
Additionally, its expenditure clocked a year-over-year growth of 2.4 times to grow from ₹517.7 crores in FY20 to ₹1260.2 crores in FY21. Payments for employee benefits during the fiscal year amounted to ₹316.43 crores during FY21, an increase of 104% and including ESOP buyback payments of ₹81.21 crores.