Zerodha, one of the largest stock brokerage firms, expects its revenue to stay steady this financial year according to, its CEO Nithin Kamath. “If we compare April to August of this year, versus that of last year, there is no growth. In that sense, we are just steady,” says Kamath.
After the slowdown in stock markets in the beginning of this fiscal, the brokerage firm is back to adding a healthy number of new customers every month. The Bengaluru-headquartered firm is adding about 250,000 new customers every month, up from about 150,000 in the first half of this calendar year.
Currently, it has a client base of about 10.18 million users, of which nearly 6.3 million are active. However, the figures have stagnated over the last few months and there is an apprehension that its topline and profit could be flat in the current financial year.
Zerodha reported a 38.5 per cent growth in revenue for the financial year 2022-23 at Rs 6,875 crore compared with the previous financial year. It reported a 39 per cent growth in profits, which stood at Rs 2,907 crore in FY23. In the year-ago period it reported a revenue of Rs 4,964 crore and a profit of Rs 2,094 crore in FY22.
The company has invested in an options-only trading platform called Sensible. However, it tries to encourage people to trade responsibly. “This company nudges people to trade option strategies versus trading naked options. One of the big reasons why people lose money in the option market is because they trade naked options,” he added.
“I think one of the things that we’ve done well as a business is that we are frugal in the way we run the business. Our team size has remained exactly the same in the last four or five years, but the business has grown at 10X,” he says.
India’s first passive AMC
Zerodha has launched its asset management company (AMC) in partnership with Smallcase, which was incubated by the company’s fund Rainmatter. This would be India’s first passive-only AMC, claims Kamath. Zerodha Fund House, which aims to disrupt the industry, has begun its mutual fund (MF) foray by launching two new fund offers or NFO.
“One of the reasons for to do it with Smallcase is also because they have the experience of building these ETF (exchange traded funds) type of products and they also build their own distribution as well. It also helps reduce execution risk for us,” he explains.
It has launched two index funds that track the Nifty Large/Midcap 250 Index and Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund. Nifty LargeMidcap 250 Index combines 100 Largecaps (represented by the Nifty 100 Index) and 150 Midcaps (represented by the Nifty Midcap 150 Index) in equal proportion. It covers 250 stocks, diversified across 20 sectors, and aligns well with the Indian economy.
The index rebalances itself to reflect a 50:50 ratio of large and midcap exposure every quarter, which lets the fund make the most of different market cycles. This approach offers a sweet spot between large and midcap and considers future prospects in the Indian stock market.
The other fund, Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund, provides tax benefits under Section 80C and comes with a three-year lock-in.
The Changemaker 2023 Awards will take place in New Delhi on November 3. The Presenting Partner for the event is: Sastra University. Associate Partners: Life Insurance Corporation of India ( LIC), Casagrand, Gujarat Mineral Development Corporation, Punjab & Sind Bank, United India Insurance; LIC Housing Finance Ltd, GAIL and NTPC; Banking Partner: J&K Bank; Online Grocery Partner: Big Basket; Tourism Partner: Bihar Tourism; Education Partner: SSVM Institutions; Television Partner: NewsX; Gifting Partner: Anand Prakash; Knowledge Partner: Ashoka & Deloitte and Validation Partner: Niiti Consulting.
The link to view the event live: https://bit.ly/BLCM23