Zerodha sees 40% drop in brokerage revenue in Q1 FY26; signals business pivot

Stockbroking platform Zerodha has reported a sharp decline in brokerage revenue for the first quarter of FY26, as regulatory changes by the Securities and Exchange Board of India (Sebi) and a slowdown in market activity hit its core business.

The discount brokerage posted a 40% drop in brokerage revenue in Q1 FY26 compared to the same quarter last year, according to a blog post by founder Nithin Kamath, who added that the “time has finally come for the business to pivot.”

The decline comes amid Sebi- and exchange-led interventions, including a rise in securities transaction tax (STT) on options, a reduction in options expiries to two weekly contracts, removal of transaction charge rebates, and an increase in the Basic Services Demat Account (BSDA) limit.


According to a graph shared in the post, total revenue for the year ending March 2025 is estimated at around Rs 8,500 crore, with net profit at about Rs 4,000 crore, though exact numbers are yet to be confirmed. In FY24, Zerodha reported revenue of Rs 9,994.5 crore and a net profit of Rs 5,493.4 crore, according to Tracxn.

“Another year where I was pessimistic about the business has passed, and it’s been another year where I’ve been pleasantly surprised. That said, the regulatory actions, be it the drop in transaction charges revenue, the increase in STT on F&O, the proposal to make futures and options trading tougher, ASBA for trading, the increase in BSDA limit, etc., will have a significant impact on our revenues and profitability,” said Kamath.

Despite the revenue dip, the blog post noted that Zerodha continues to expand its footprint in client assets and new offerings. Customer assets on the platform now account for roughly 10% of India’s retail and high-net-worth individual (HNI) assets under management (AUM). Its margin trading facility (MTF), launched nine months ago, has already captured around 5% of the market, with a book size of about Rs 5,000 crore.

Zerodha, along with other major brokers, has seen its active client base shrink this year. NSE data shows Zerodha’s active clients fell to 7.26 million in August from 7.95 million in February. Groww also saw its active users decline to 12.07 million from 13 million over the same period.

Groww recently filed its draft red herring prospectus (DRHP) with Sebi for a Rs 6,000-7,000 crore public issue.

Earlier this month, Sebi chairman Tuhin Kanta Pandey said the regulator will issue a consultation paper on futures and options (F&O) contracts. Kamath, however, recently criticised media reports on X, saying there has been no consultation with brokers regarding the removal of weekly options expiry.

However, in the blog post, Kamath flagged further risks to the options business if weekly options are eliminated entirely. “If this were to happen, we would be forced to start charging brokerage for equity delivery trades to make the business tenable. Most of our competitors already charge for delivery trades,” he wrote.