SUMMARY
- Zerodha has reported over Rs 8,370 crore in revenue and Rs 4,700 crore in profits.
- This represents a notable increase from the Rs 6,875 crore in revenue from operations and Rs 2,907 crore in PAT reported in FY23.
- Cofounder and CEO Kamath mentioned that the profitability over the last three years has nearly doubled the value of the customer funds under management.
Stock broker Zerodha has reported over Rs 8,370 crore in revenue and Rs 4,700 crore in profits, as detailed in a blog post by its cofounder and CEO, Nithin Kamath.
This represents a notable increase from the Rs 6,875 crore in revenue from operations and Rs 2,907 crore in profits before tax reported in FY23. The company notes that these profits do not include an estimated Rs 1,000 crore in unrealized gains, which will be reflected in its financial statements once recognized. Zerodha has yet to officially submit its audited financial statements.
The information provided by Zerodha shows that over half of its earnings have translated into profits.
In the blog post, Kamath mentioned that the profitability over the last three years has nearly doubled the value of the customer funds under management, making Zerodha one of the most secure brokers for trading.
Kamath also highlighted that the firm is currently facing a slowdown in both revenue and profit, and anticipates a significant drop in revenue later this year. This is due to the expected introduction of new regulations by the Securities and Exchange Board of India (SEBI), which will eliminate the volume-based transaction fee model for free equity trades, affecting all brokers, including Zerodha.
The Securities and Exchange Board of India’s true-to-label circular is set to launch on October 1, and Zerodha expects a 10% decrease in revenue as a result of this regulation.
Kamath believes that these regulatory changes will have a significant impact on the company, particularly on its revenue from index derivatives, which currently accounts for a large portion of its earnings. He anticipates a drop in revenue ranging from 30% to 50%.
Additionally, Zerodha’s annual maintenance charges (AMC) will be affected by the new basic services demat account (BSDA) thresholds established by the regulator. Kamath explained that the company will now charge the full AMC for customers with demat holdings exceeding Rs 10 lakhs, up from the current threshold of Rs 4 lakhs. The removal of the account opening fee, along with these changes, is expected to lead to a substantial decline in revenue.
Despite these challenges, Zerodha remains optimistic about navigating the slow period, attributing its confidence to its small team, prudent spending, and robust financial position. With a workforce of 1,200, only a fraction of them are involved in the core operations of the business.
