Zerodha profit, revenue jumped 60% in FY22, says CEO Nithin Kamath

Zerodha, one of the country’s largest online brokerages, has posted almost 60% year-on-year jump in both its profits and revenues for 2021-22 at around Rs 1,800 crore and Rs 4,300 crore, respectively, its founder and chief executive Nithin Kamath said.

“Last financial year we saw many users coming in, there was market volatility and a lot of initial public offerings (IPOs)…so we were able to clock higher daily average users,” Kamath told ET in an exclusive chat.


“Last two years have been an outlier for trading companies. Trading volumes have peaked, but this is a very cyclical business,” he added.

Zerodha had reported overall revenues of Rs 2,729 crore in FY21, up from Rs 938.5 crore in the previous year, while its profit jumped 164% at Rs 1,122 crore from Rs 424 crore in FY20, as per the company's public filings.

Zerodha’s financials for FY22 are yet to be filed by the Ministry of Corporate Affairs (MCA).

Zerodha’s active client base as of March 31, 2022, was around 6.2 million, as per the National Stock Exchange (NSE) data. The company is clocking about 10-12 million orders every day, it said.

However, Kamath said the company is bracing itself for a downturn with the slowdown in public markets. "We might probably see growth slowing down in the next 3-6 months. I don't see any companies going for an IPO in the next 3-6 months too, maybe apart from the LIC IPO,” he said.

New order system in progress

In a bid to remove its reliance on legacy systems, Zerodha said it is presently working to develop an in-house order management system (OMS), which is expected to be rolled out during the start of next year. Zerodha currently leverages third-party order management systems (OMS) such as Refinitive, with the move in line to have more control over the overall customer experience.

“We are right now working on replacing that (OMS tieup) so as to be in full control of our product as front end innovations make no sense if we don't own the OMS,” Kamath said.

Zerodha had faced public investors' fury in February 2019after its OMS froze during trading hours. The company’s trading platform was leveraging Thomson Reuters’ Omnesys, an exchange approved OMS vendor, for its order management.

“We have come a long way and we don't want to be branded as a company that had a glitch once,” Kamath said.

He said the platform will also work more on its ‘nudge’ feature, which helps traders on the platform make more informed decisions about their investments. Last year, Zerodha launched ‘kill switch’ as a part of the ‘nudge’ feature to instantly disable trading for investors constantly making losses.

“We can't control what a customer does with the money, but we can influence and push them or nudge them in the right direction and we send these nudges relying on the data from BSE (Bombay Stock Exchange) and Sebi (Securities and Exchange Board of India) and more,” Kamath said.

License play

Zerodha in 2021 received in-principle approval from Sebi to set up an asset management company (AMC) and is now awaiting a final nod from the markets regulator. Kamath hopes the approval will come by this year.

“I think there are more AMCs today and there is very little space for a new name…however, our (Zerodha) product will be to simplify mutual fund investing and this will be passive products aimed at long-term investing,” he said.

Kamath said Zerodha is staying cautious about opening trading for US Stocks. “We don't want to build another platform to trade in the US stocks,” he said. “But regulations today are very stringent on this... Now, if we are offering this service and our platform goes down, it is a risk and it is a grey area.”

The company is also into the lending business, offering loans to individuals and businesses at 10.5% interest.

“The way traditional NBFCs had been doing is charge processing fees or delayed payment fees and get people to borrow more, but that has a negative impact…so we decided to not have any fees on delayed payments,” Kamath said.

However, he said it is getting difficult to make money from the lending business and it is working on improving the unit economics.

Zerodha competes with other online brokerages including Groww and Ratan Tata-backed Upstox.

In October last year, Groww raised $251 million in a funding round led by Iconiq Capital. Now, the online brokerage firm is in active talks to raise another $150-200 million in a fresh round which could bump up its valuation to $5 billion.

In November 2021, Upstox was in talks to raise $25 million from Tiger Global and entered the unicorn club, with an estimated valuation of $3 billion.