Online discount brokerage firm Zerodha has recorded a total revenue of ₹8,320 crore and a profit of ₹4,700 crore in the financial year 2023-24 (FY24). The figures are up by 21% and 62% as compared to previous fiscal year.
A healthy stock market, a surge in retail participation, and a comeback of the IPO market have contributed to the financial prosperity of Zerodha. However, the stock brokerage is still one of the strongest players in domestic discount brokerage industry and is still winning hearts of its clients – from the looks of it, Zerodha’s customers currently hold over ₹5.66 trillion in their demat accounts. Nitin Kamath took to a blog post to inform that the company’s unrealized potential profits have now crossed the ₹1 trillion threshold.
Speaking of Zerodha, the homegrown firm has noted an increase in its retail investors, particularly from tier-2 and tier-3 cities. This has not been without hurdles, of course, including a decline in market share of active accounts over the past two years. Kamath attributed this dip to Zerodha’s previous decision to charge account opening fees, which has now been scrapped to remain competitive.
“As I alluded to in the beginning, many of the regulatory changes we were anticipating have come to pass. The True to Label circular, SEBI consultation paper on index derivatives, STT going up, annual maintenance charges impacted due to increased BSDA limits, and hit to our partner/referral business. Along with this, there’s never been more competition in the broking space. Then there’s the ever-present threat of markets going down. This perfect storm means big hits to the business. The best for the Indian broking industry may well be behind us,” Kamath wrote in a post on X.
And if this is not enough, a recent report by SEBI reveals that a majority of retail traders have been hit hard, even as they have been increasing their presence in the future and options (F&O) sphere. According to reports, nearly 93% of retail traders were hit with an average loss of ₹2 lakh/ trader over the past three financial years.
“With increased participation of individual investors in equity and equity derivatives markets, the current study was undertaken to analyse profit and loss patterns for individual traders in F&O during the three years FY22 to FY24, and for all the categories,” the report by SEBI stated. Zerodha does not seem to be an exception to this, and Kamath has warned that recent changes introduced by the Securities and Exchange Board of India (SEBI) may result in a significant hit to the company’s topline. For now, SEBI is expected to bring multiple measures to put a cap to the participation of retailers in the derivatives market.
