India's largest stock broking platform Zerodha told 8,320 crore revenue and According to co-founder and CEO Nithin Kamath, the company's profit is Rs 4,700 crore.
this is a great achievement A revenue of Rs 6,875 crore and a profit of Rs 2,907 crore were recorded in FY 2023. Moreover, Zerodha's net profit grew by 39 per cent in FY 2023. Its revenue stood at Rs 2,094 crore in FY22 and its revenue grew by 35.5 per cent from FY21. Rs 4,694 crore in FY 22.
'Unrealistic benefits, real risks'
“Profits are not considered in ~ 1,000 crore of unrealised profit, which will reflect in our financial statements. Looking at the last three years of profitability, our net worth is around ~40 per cent of the client funds we manage. This makes us one of the safest brokers to trade with,” Kamath said.
“Multiple risks … are coming together. We are already seeing stagnation in revenue and profit, and we are bracing for a big decline in revenue later this year,” he said.
'Prepare for a big drop in revenue'
Kamath listed several reasons why he thinks Zerodha's numbers will decline. These are:
- With the new Basic Services Demat Account (BSDA) thresholds set by the regulator, the amount of annual maintenance charges (AMC) collected changes. “Essentially, we can charge full AMC from customers holding demat “Today, the revenue is more than Rs 4 lakh. If we remove the account opening fee, it will lead to a significant drop in revenue,” he said.
- “We have had a robust partner and referral program since the beginning, relying on word of mouth from clients. Clients would refer other clients and we would share a small portion of the brokerage as commission. We had to stop these payments as the exchanges have issued new guidelines stating that payments can only be made to authorised persons (APs) registered with the exchanges. Due to this, referrals from thousands of people will now be limited to just a few registered APs, impacting growth,” Kamath shared.
Kamath also highlighted the “risk of the bull market ending at any time”, saying this would lead to “substantial correction”. However, he added that Zerodha is “well covered” to deal with the sluggish period with “a small team, efficient expenses and infrastructure and content costs, and a strong net worth”.