Online stock broking platform Zerodha has announced impressive financial results for FY23, with a revenue surge of 38.5% to reach ₹6,875 crore. The company’s profit after tax stood at ₹2,907 crore, marking a significant 38.8% increase compared to the previous fiscal year.
Nithin Kamath, Co-founder and CEO of Zerodha, shared insights into the company’s performance in a recent blog post. He noted, “We continued to see phenomenal growth even in FY 22/23. That said, the business has plateaued in terms of revenue and profitability this financial year until now.”
One of the key drivers of Zerodha’s robust revenue growth was its futures and options (F&O) trading segment. According to NSE data from August, Zerodha boasted approximately 6.3 million active clients.
Kamath highlighted the broader market landscape, stating, “We have 12 crore demat accounts (non-unique) in India, and NSE active client data indicates three crore Indians who traded once a year (unique) on the exchange. So approximately 3% of everyone with a demat account and 15% who traded the market, traded in F&O last year. However, this subset of users would have contributed to the majority of revenues for all brokerage firms and even the exchanges.”
While acknowledging F&O trading’s significant contribution to its revenue, Kamath also cautioned against excessive reliance on this segment. He emphasized that regulatory changes, shifts in market conditions, or the emergence of competitors with superior products could impact retail trading activity in F&O and, consequently, revenue.
However, Kamath expressed confidence in Zerodha’s overall position, with assets under management totaling ₹3 lakh crore. This substantial asset base positions the company well in terms of financial stability and competition readiness. He added, “Given our net worth, frugal operations, customer trust, and agility as a business, we are well placed to pivot whenever required.”
Finfluencer Affiliation and Asset Management Company (AMC) Updates
Zerodha has shown support for SEBI’s consultation paper proposing restrictions on brokers’ associations with finfluencers (financial influencers) who act as advisors or analysts. Kamath acknowledged that such regulation could also impact Zerodha’s referral and partner program, which currently contributes to nearly 10% of its new business.
Additionally, Zerodha shared updates on its asset management company (AMC), operating under the name Zerodha Fund House in partnership with smallcase. This passive-only AMC has received final approval from SEBI and is expected to launch with its first two funds in the coming weeks.
