Zerodha FY24: Profit Jumps 61% YoY To INR 4,700 Cr, Revenue Grows 21%

Online stock broking major Zerodha posted a 61% jump in its consolidated profit after tax (PAT) to INR 4,700 Cr in the financial year 2023-24 (FY24) from INR 2,909 Cr in the previous year on the back of strong growth in its business.

The bootstrapped startup clocked a revenue of INR 8,320 Cr during the year under review, up 21% from INR 6,875 Cr it reported in FY23, Zerodha cofounder and CEO Nithin Kamath said in a blog post.

Founded in 2010 by the brother duo of Nithin and Nikhil Kamayth, Zerodha allows users to trade in stocks and invest in mutual funds. The Bengaluru-based invest tech startup generates revenue from brokerage sales, user onboarding collections, and the sale of its premium tech products such as Kite Connect API.

Zerodha’s total assets under management have swelled to INR 5.66 Lakh Cr on the back of a bull run in the Indian equities market, rising retail participation and boom in the IPO market. Traders on the platform are currently sitting on unrealised profits worth over INR 1 Lakh Cr, according to Kamath.

Zerodha’s net worth is almost 40% of the customer funds it manages, he said.

However, Kamath pointed out that Zerodha is already seeing revenue and profit plateau and the company is bracing for a big revenue hit this year due to upcoming regulatory changes.

It is pertinent to note that SEBI’s true-to-label circular, set to go live on October 1, 2024, will eliminate the volume-based transaction fee model for free equity delivery trades, impacting all brokers, including Zerodha. As a result, the firm expects a 10% dip in revenue due to this regulation, Kamath said.

A significant part of Zerodha’s earnings comes from index derivatives, he explained.

India’s capital markets regulator has released a consultation paper on index derivatives and solicited feedback from the public. Kamath expects the new rules to come into effect in the next year and anticipates a 30% to 50% drop in revenue owing to the potential changes.

It is pertinent to note that Zerodha received final approval from SEBI to commence the operations of its asset management company (AMC) in August 2023. 

Zerodha’s annual maintenance charges (AMC) will also be affected by new basic services demat account (BSDA) thresholds set by the regulator. Kamath added that the company can now charge the full AMC for customers with demat holdings of INR 10 Lakh and above, up from the previous threshold of INR 4 Lakh. 

Despite these challenges, Zerodha is confident it can navigate the slow period due to its small team, careful spending, and strong finances. The company has 1,200 employees, with only a small portion dedicated to running the core business.