Whalesbook
Zerodha, the country's largest brokerage firm based on revenue, has reported a significant downturn in its financial performance for Fiscal Year 2025 (FY25). The company's revenue fell by 15% to approximately Rs 8,500 crore, down from Rs 10,000 crore in FY24. Net profit also decreased by 15% to Rs 4,200 crore from Rs 5,500 crore in the previous fiscal year.
Founder and CEO Nithin Kamath attributed this decline to several regulatory changes, including an increase in Securities Transactions Tax (STT) on options, a reduction in weekly options expiries to two, an increased limit for Basic Services Demat Accounts (BSDA), and the removal of exchange transaction charge rebates. These factors, coupled with a general slowdown in market trading activity, impacted Zerodha's financial results as anticipated.
Looking ahead, Zerodha has issued a stark warning, predicting an even more substantial revenue decline of up to 40% in FY26 compared to FY24. The firm is already observing a 40% year-on-year drop in brokerage revenues in the current June 2025 quarter.
In contrast, the competitive landscape shows differing performance. Groww, an IPO-bound fintech and the largest brokerage by active investors, reported only a 10% revenue decline in the June quarter. Groww also achieved substantial growth, with profits tripling to Rs 1,819 crore and revenues growing 31% to Rs 4,056 crore in FY25, largely by focusing on wealth products and diversifying away from F&O trading.
Angel One, another publicly listed brokerage, has experienced a revenue fall of nearly 30% from its peak. Zerodha's CEO indicated that if regulators further restrict options trading, Zerodha might be compelled to start charging brokerage fees for equity delivery trades to maintain business viability.
Zerodha's market share among active traders has shrunk from 22% in early 2023 to approximately 16% currently. However, it still holds about 10% of the nation's total retail and high-net-worth individual assets under management (AUM).
The broader market trend shows that India's top four brokers collectively lost nearly 20 lakh active investors in the first half of 2025, a trend attributed to waning interest in F&O trading amid stricter SEBI norms.
Impact:
This news has a significant impact on the Indian stock market, directly affecting the financial services and brokerage sectors. It highlights the sensitivity of brokerage business models to regulatory changes and trading volumes, potentially leading to market share shifts and strategic adjustments among key players. Investors monitoring the financial sector will find this highly relevant.
Rating: 8/10
Difficult Terms:
FY 25/FY 24: Fiscal Year 2025/2024, referring to the financial year ending March 31, 2025/2024.
Topline: Refers to a company's gross revenue or sales.
Futures and Options (F&O): Derivatives contracts whose value is derived from an underlying asset, often used for speculation or hedging.
Securities Transactions Tax (STT): A tax levied on the value of securities traded on a stock exchange.
Basic Services Demat Account (BSDA): A type of Demat account with lower charges and specific limits, typically for smaller investors.
Demat Account: An electronic account used to hold shares and other securities.
Brokerage: A fee paid to a broker for executing buy or sell orders.
Equity Delivery Trades: Transactions where shares are bought with the intention of holding them for longer than one trading day, resulting in actual ownership transfer.
IPO-bound: A company that is in the process of preparing to offer its shares to the public for the first time through an Initial Public Offering.
Active Investors: Investors who engage in frequent trading activities within a specified period.
SEBI: The Securities and Exchange Board of India, the primary regulator of the securities market in India.
Assets Under Management (AUM): The total market value of assets managed by a financial institution on behalf of its clients.