Zerodha marks 16 years with steady profits

Online stock brokerage platform Zerodha has posted a net profit of Rs 4,283 crore in the financial year ending March 31 2026, up around 1.2% YoY from Rs 4,231 crore in the previous fiscal, while revenue remained flat.

The Bengaluru-based firm’s revenue from operations was Rs 8,847 crore in FY25.

Zerodha does not disclose absolute numbers, but shares bar graphs with indicative figures.

In a blog post marking 16 years of Zerodha, CEO Nithin Kamath attributed the flat performance in real terms to the end of the bull market and the removal of rebate on transaction charges.

Since the Indian market peaked in September 2024, trading activity has cooled and new account growth has moderated YoY. Additionally, macroeconomic headwinds, including a Middle East energy crisis, and the lack of local AI play have kept Indian markets sideways while international indices rallied, he said.

Meanwhile, the drop in transaction fee revenues was offset by interest earnings from the margin trading funding (MTF) business, where clients trade using borrowed capital.

Kamath highlighted Zerodha’s position as India’s largest retail broker by assets under management (AUM), representing customer-held investments. This includes Rs 1,00,000 crore in assets acquired from IL&FS. 

Operating with a remarkably small team of fewer than 100 people across tech, product, business, and operations allows the firm to iterate quickly using AI. The NRI business also shows promise due to simplified onboarding guidelines.

However, the MTF book has swelled to Rs 9,000 crore, with clients borrowing Rs 6,000 crore, which represents 25% of Zerodha’s net worth.

Being wary of this rapid leverage, Kamath said, “Leverage gives you a boost when things are good. But when things go bad, they can get bad really, really quickly.”

Furthermore, the brokerage remains heavily dependent on high-risk futures and options (F&O) contracts, which Kamath noted are unprofitable for 99% of retail traders and face tightening regulations.

Broking lacks compounding because mandatory quarterly fund settlements, which return unused cash to banks, mean starting with a clean slate each time.

Account maintenance charges contribute only 2% to revenues, while MTF contributes 10%. To hedge these industry-specific risks, Zerodha has diversified into Zerodha Capital, Zerodha AMC, and the Rainmatter Foundation.

Regulations have also escalated working capital requirements. Zerodha now requires Rs 11,000 crore in capital to operate, which serves as a protective moat against smaller competitors.

Kamath noted that scale limits nimbleness,“At our scale, even a tiny issue can affect lakhs of customers, and that means we have to be extra careful in everything that we do.”

In other updates, Zerodha said it has resumed 10% referral commission. Moving forward, it plans to launch US investing and integrated mutual fund transactions on its Kite platform.