Zerodha’s Annual Profit and Business Insights FY26
Zerodha reported a net profit of Rs 4,283 crore in FY26, reflecting a 1.2% increase from Rs 4,231 crore in the previous fiscal year, despite its revenue remaining relatively stable, as noted by co-founder and CEO Nithin Kamath in the latest company update. Kamath highlighted that the revenue has not experienced growth in real terms due to a slowdown in the bull market and a decline in transaction-fee income. However, the decline in transaction-fee revenue has been somewhat mitigated by the income generated from its margin trading facility (MTF).
Insights on Margin Trading Facility (MTF)
Zerodha introduced its MTF in December 2024, which now contributes approximately 10% of its overall revenue. The MTF book has reached Rs 9,000 crore, with customers borrowing around Rs 6,000 crore. Kamath expressed concern regarding the MTF operations, particularly regarding customer borrowing for investment purposes. Currently, borrowing via MTF accounts for about 25% of Zerodha’s net worth. While this may be manageable in a rising market, it introduces potential risks if there are any sharp declines.
Account Growth and Market Position
According to the latest business update, Zerodha has experienced a slowdown in the growth of new accounts, attributed to the prevailing weakness in the stock market. Kamath pointed out that Zerodha is now considered India’s largest broker by total assets under management (AUM), with around Rs 1 lakh crore of this AUM stemming from customers previously acquired from IL&FS. Although Zerodha’s share of active NSE customers and total demat accounts has seen a decline, the company’s portion of retail AUM continues to rise.
Challenges and Future Plans
The firm acknowledged that mutual funds represent an area it “may have slipped up a little.” To enhance product discovery and improve customer experience, Zerodha anticipates that its upcoming mutual fund integration with Kite will address these challenges effectively. Moreover, the company requires approximately Rs 11,000 crore in capital to maintain its current operational scale, and Kamath emphasized that this need serves as a competitive barrier for Zerodha.
Diversification and Strategic Focus
In addition to its broking services, Zerodha is actively exploring opportunities in asset management, lending, and insurance, whilst continuing to invest through its Rainmatter initiative. Overall, while Zerodha remains profitable, the growth of new customers and trading activities has seen a downturn. The company is now directing its efforts towards expanding customer assets, developing new business ventures, and rolling out innovative products, all while maintaining a lean team structure.