Zerodha Capital Achieves Remarkable Profit Growth in FY25

Zerodha Capital, the lending division of the renowned stockbroker Zerodha, has announced a substantial net profit of Rs 12.5 crore for the financial year ending March 2025, a significant increase from Rs 7.2 crore in FY24.

As reported by ET, the company has successfully doubled its income to Rs 36 crore in FY25, compared to Rs 17 crore in the previous financial year.

According to ICRA, this profit surge was primarily propelled by a 3.2X increase in its loan book, which expanded to Rs 381 crore during the first nine months of FY25.

Zerodha Capital’s Lending Strategy

Zerodha Capital assists retail investors by offering loans against their stocks or mutual funds. The operation is streamlined with a compact team that leverages the extensive reach of Zerodha’s broking business, which boasts 81 lakh (8.1 million) active clients on the NSE—accounting for around 16% of the market share. The company employs its vast customer network to provide loans of up to Rs 1 crore, utilising shares or mutual funds as collateral, lending up to 45% of their respective values. Most transactions are facilitated through digital platforms.

Financial Health of Zerodha Capital

By December 2024, Zerodha Capital’s net worth was recorded at Rs 170 crore, reflecting a gearing ratio of 1.4X. This indicates that for every Rs 1.00 of its own equity, the company had Rs 1.40 in debt, according to ICRA. Additionally, the promoter group has intentions to inject Rs 125 crore through compulsorily convertible preference shares to bolster future growth. Notably, Zerodha Capital has maintained a record of zero Non-Performing Assets (NPAs) since it commenced operations.

ICRA has maintained Zerodha Capital’s credit rating at AA- (Stable)/A1+ and has assigned the same rating to its recent Rs 100 crore short-term borrowing initiative. Although ICRA acknowledged that the company is relatively small and depends on a select group of lenders, it expressed confidence in Zerodha Capital’s strong affiliation with the Zerodha Group and its prudent lending practices.

Future Outlook for Zerodha Capital

Established in 2021, Zerodha Capital aims to enhance its credit offerings within the securities ecosystem. However, its ongoing performance is closely linked to market dynamics and regulatory changes, particularly as retail Futures and Options (F&O) activities—the foundation of the group—encounter stricter regulations.

The parent company of Zerodha Capital, Zerodha Broking Limited, reported a net profit of Rs 5,496 crore in FY24, achieving an impressive return on net worth of 56% during the same fiscal year.