Zerodha Mulls Ending Zero-Brokerage Model After 40% Decline In Q1 FY26 Revenue

For the first time in its history, investment tech giant Zerodha is considering charging brokerage fees for equity delivery trades after a decline in its revenue in FY25 as well as Q1 FY26. 

In a blog post marking the company’s 15th anniversary, Zerodha cofounder and CEO Nithin Kamath said that the government’s continuing crackdown on futures and options (F&Os) could force it to charge brokerage fees to “make the business tenable”.

“… The options business might be at further risk, with the regulators evaluating whether to stop weekly options completely. If this were to happen, we would be forced to start charging brokerage for equity delivery trades to make the business tenable,” Kamath said.

While Zerodha is yet to disclose its financial results for FY25, Kamath, in the blog post, also gave a glimpse of the company’s performance during the fiscal via a graph. 

While exact figures were not shared in the graph, it appeared that the online brokerage platform’s net profit sank below the INR 5,000 Cr mark in the period under review, while revenue also appears to have taken a significant hit. 

Kamath attributed the hit to Zerodha’s finances in FY25 to multiple regulatory directives, which had a direct adverse effect on trading volumes and cost structures. Some of these developments included: 

• The markets regulator SEBI increased the securities transaction tax (STT) on options and futures, effective October 2024, raising trading costs. The move was taken to discourage speculative activities in F&O segments.
• The basic services demat accounts (BSDA) limit was increased to INR 10 lakh from INR 2 Lakh in September 2024, which encouraged more retail participation but also led to lower transaction charges and fee revenues from small investors.
• In a bid to enforce a uniform transaction fee structure, the SEBI removed exchange transaction charges rebate for all trading members. Previously, brokers benefited by pocketing the difference between lower fees paid to the exchange and higher rates charged to clients
• The withdrawal of exchange transaction charge rebates increased costs for participants, directly impacting broker and exchange earnings.
• A general drop in market activity further compounded the negative impact from higher costs and limited duration of trading product

Zerodha’s Brokerage Revenues Bleed

Noting that the company’s revenues and profits took a hit last year, Kamath said that time has “finally come” for Zerodha’s business to “pivot”. And, the impact of these various curbs since October last year is now emerging in its financial numbers.

The Zerodha CEO said that the platform’s brokerage revenues tanked 40% YoY in Q1 FY26.

“The impact of all these changes started hitting us from October 2024, so the numbers don’t fully reflect in the financial year 2024-25. This year, we are seeing a substantial hit of about 40% in brokerage revenues in the latest quarter (June 2025) compared to the same quarter last year,” added Kamath.

Nevertheless, the company still retains nearly 10% share of all retail and HNI assets in India and has grown its margin trading facility (MTF) book to about INR 5,000 Cr in the past nine months since launch.

That said, this is not the first time that Kamath has shared a bearish outlook for Zerodha and the broader broking industry. In February, he said that the brokerage was witnessing a degrowth in its business for the first time in 15 years, adding that markets were “finally correcting”.

In January also, Kamath said that 2024 was arguably the best year for the brokerage industry. He, however, added that the moment would be ending soon. 

On the financial front, Zerodha, which competes with the likes of Groww, Dhan, Angel One, among others, reported a net profit of INR 5,496.3 Cr in FY24 against an operating revenue of INR 9,372.1 Cr.