Athira Sethu
Kochi, 25 September 2024
Leading discount brokerage firm, Zerodha, touched a billion dollar of revenue and more than half a billion dollar of net profit in the last financial year.
In FY24, Zerodha’s profit jumped 62% to Rs 4,700 crore, while its revenue rose 21% to Rs 8,320 crore.
However, company’s cofounder and CEO, Nithin Kamath said that the company is going to experience heavy revenue loss from October 1, 2024 onwards owing to new SEBI guidelines.
In a blogpost, Kamath stated that revenue and profits are already levelling out in Zerodha. The new regulations would bring about a deduction of 10% to the revenue.
In addition, changes in rules around the index derivatives may bring down another 30% to 50% dip in revenues. The increase in STT (Securities Transaction Tax), which is set to come into effect from October 1 will also affect its revenue.
While it may not have much of an impact on the options trading itself, the futures trading will take a significant hit because of this, further burdening the company’s finances.
Kamath also highlighted changes in Annual Maintenance Charges (AMC) for Basic Services Demat Accounts (BSDA).
Now, the hike in threshold to charge full AMC would be from Rs 4 lakh to Rs 10 lakh, increasing the number of customers who would now pay less and thus bringing down revenues. No account opening fees would even further reduce the income of the company.
Currently, Zerodha manages Rs 5.66 lakh crore in assets across its demat accounts, with customers holding unrealized profits crossing Rs 1 lakh crore.
Meanwhile, Zerodha is facing tough competition from other discounting firms like Groww and Angel One. New account opening has fallen below 3 lakh a month from the peak of around 4 lakh. As a response to this competitive landscape, Zerodha has eliminated its account opening fees.
On possible IPO plans, Kamath said Zerodha prefers staying private, as the company is profitable and doesn’t see a reason to raise funds immediately.
The brokerage firm also has a small credit business, which provides loans against shares worth about Rs 300 crore and supports the Zerodha Fund House, which has assets under management of about Rs 3,000 crore.
