On November 19, sources said that Indian companies surpassed the previous record of Rs 1.18 lakh crore by raising over Rs 1.19 lakh crore through public listing so far this year.
Although the stock market frenzy caused modern discount brokers to expand rapidly, their operations are expected to be significantly impacted by the recent regulatory changes pertaining to futures and options trading.
Kamath forecasted a 60% impact on futures and options trades and a 30% impact on all orders placed on his platform.
Increasing competition
In terms of active users, Zerodha, which was valued at about $3.6 billion in 2023, is up against fierce competition from Mumbai-based listed stock broker Angel One and venture-funded firm Groww.
According to NSE data, Groww had about 12.5 million active traders as of October, while Zerodha and Angel One had 8 million and 7.5 million, respectively.
“It is good to have multiple players growing fast in the same ecosystem since the increased participation in capital markets will have a multiplier effect for the entire ecosystem at large,” Kamath said.
Zerodha is still the market leader in terms of its financials. In the fiscal year 2024, it reported a net profit of Rs 4,700 crore and total revenue of Rs 8,370 crore.
The account opening rate has grown by almost 20% as a result of Zerodha’s recent announcement to eliminate account opening fees in response to market competition. The company’s active user base hasn’t altered all that much, Kamath continued.
“There has been a huge increase in opening of accounts within the industry, and hope that in case of any possible downturn or lower growth in the markets, all the accounts opened continue to remain active in the long run,” he added. Zerodha is opening between 2.5 lakh to 3 lakh accounts every month.
New products
In order to boost customer engagement, the stockbroker is developing new credit-related products. In addition to the loans against securities it has been providing for a few years, Zerodha Capital, the nonbanking financing division of stock broking giant Zerodha, is about to introduce two additional secured credit products: loans against shares and loans against mutual funds.
Additionally, the business plans to offer margin trading financing as a service to clients who want it.
Despite the fact that practically all major brokers provide this product, Zerodha wishes to limit its availability for certain users due to the high level of leverage required, which may not be appropriate for all types of retail clients.
The organization currently disburses between Rs 80 and 90 crore per month and has already built assets under management of Rs 350 crore. Approximately 7,000 clients have used this product. Since it is a secured product, the interest rate on the loans is lower than that of other unsecured loans available on the market.
In 2018, Zerodha received an NBFC license from the Reserve Bank of India. In addition to the credit business, the Bengaluru-based company operates Rainmatter Capital, an early-stage venture firm with a portfolio of over 90 firms, and owns a majority position in Zerodha Fund House, an asset management company.
