Zerodha Hits ₹8,320 Crore Revenue and Profit at ₹4,700 Crore Amid Industry Challenges

Business Performance Overview

India's leading stock broking platform Zerodha has announced impressive financial results for FY24, achieving ₹8,320 crore in revenue and a net profit of ₹4,700 crore. This performance is a notable rise from FY23's figures of ₹6,875 crore in revenue and ₹2,907 crore in profit.

Current Financial Landscape

According to co-founder and CEO Nithin Kamath, the reported profits do not account for approximately ₹1,000 crore of unrealized gains, which will appear in future financial statements. Kamath also stated that Zerodha's net worth is now nearly 40 percent of customer funds managed, emphasizing the company's strong financial footing amidst potential risks.

Challenges Ahead

Despite the robust performance, Kamath cautioned of forthcoming plateaus in revenue and profit due to varying factors:

• A projected 10 percent revenue decrease after the implementation of SEBI’s true-to-label circular on October 1, 2024.
• Potential 30-50 percent drop in revenue driven by new regulations affecting index derivatives, a considerable revenue source.
• Increased Securities Transaction Tax (STT) from October 2024 may substantially impact futures trading.
• Changes in Annual Maintenance Charges (AMC) due to new Basic Services Demat Account thresholds will also lead to declines in earnings.
• The cessation of payouts under Zerodha's partner and referral programs due to new exchange guidelines could hinder customer acquisition efforts.
• Concerns about the possibility of the bull market capping off, implying that traders should prepare for a potential drawdown.

Future Outlook and Resilience

Despite the possible downturns, Kamath reassured stakeholders that Zerodha is strategically positioned to manage fluctuations, thanks to its lean operation model, stringent cost management, and solid net worth.