Zerodha, the country’s largest discount broker, says it has doubled its client base to 1.90 lakh in the last 12 months after it introduced zero brokerage rates for equity delivery traders. Last December, Zerodha’s client base had stood at just under a lakh traders.
“From the start of our business, we were focusing on F&O traders,” said Nithin Kamath, Founder & CEO of Bengaluru-based Zerodha. “But the trading crowd in India is very small, it’s not more than five or 10 lakh, so we had to broaden the target group.” The zero-brokerage plan on delivery trades is attractive to investors, who pay as much as 2 per cent on trade value as brokerage at full-service brokerage houses.
“To get our first 90,000 clients, it took us five years and two months. Now, in less than a year, we’ve added a lot more.”
To bring on this change, Zerodha launched a multi-language, simple and intuitive mobile trading app Kite earlier this year, which involved an investment of nearly ₹1 crore.One-stop shop
Zerodha also operates a mutual fund distribution platform, which currently has assets of around ₹45 crore and is adding ₹4-5 crore every month, Kamath said. “About a year and a half back, we were a place where F&O traders would come (for cheaper brokerage).
“Now, we’re trying to be a one-stop shop, something like a bank.
“We’ll also start giving out loans through our NBFC which will go live soon,” Kamath said.
“Across the world, brokerage has become an axillary business. It is no longer a major revenue contributor to financial firms. Even in India, brokerage revenue is becoming a tiny portion of total financial services revenue. We’re looking for different ways to make money,” Kamath added.
In FY16, Zerodha reported revenues of close to ₹125 crore and pre-tax profit of ₹65 crore. Kamath said they are on track to double these numbers this fiscal.