Stockbroking platform Zerodha has recorded an overall revenue of ₹6,875 crore for FY23, and a profit after tax of ₹2,907 crore. The company had reported ₹4,964 crore in revenue and a profit of ₹2,000 crore in the year-ago period.
“There’s still phenomenal interest in the markets, especially in futures and options. This has been the primary reason for the increase in revenue and profitability over the last three years. We continued to see phenomenal growth even in FY22-23. That said, the business has plateaued in terms of revenue and profitability this financial year until now,” wrote Nithin Kamath, chief executive officer, Zerodha, in a blog post.
The bulk of the company’s revenue comes from futures and options traders. Sharing an industry estimate, Kamath said that 45 lakh or 15 per cent of the 3 crore active traders on stock exchanges engage in F&O trades. And, it is this subset of users who contribute the bulk of the revenue earned by brokerages.
The Bengaluru-headquartered company noted that it manages an overall asset base of ₹3-lakh crore, making it the largest retail-focussed broker. “This should put us ahead of other retail-only brokers. We are also the largest brokerage in India by revenue and profitability numbers,” wrote Kamath in its blog.
‘a big risk’
The bootstrapped start-up founder also pointed out that excessive reliance on F&Os for revenue is a big risk factor for any brokerage house. However, given its frugal operations, high net worth and zero debt, Zerodha believes it is well-placed to pivot in case there is strong regulatory action or a market correction in this segment.
He spoke about the SEBI consultation paper on finfluencers. “We think that if anyone acts like an advisor or analyst without a SEBI registration, they shouldn’t be able to collect any fees directly from the customer or indirect,” he wrote.
However, he pointed out that it could impact Zerodha’s referral programme. The referral and partner programme together get Zerodha 10 per cent of its new business.
As for its newly registered asset management business, Kamath is looking forward to launching the new funds within the next two weeks in partnership with Smallcase.