Startup Deep Dive : Zerodha — Zero brokerage on delivery, Rs 4,237 crore net profit anyway

Zerodha has never raised a rupee of outside money, yet it made a net profit of ₹4,236.7 crore (about $441 million at $1 ≈ ₹96.0, as of 18 September 2026, Trading Economics) in the year ended March 2025 — more than three-time listed brokerage rival Angel One’s entire profit pool for the same period. The contradiction sits one layer deeper: Zerodha charges zero brokerage on the equity delivery trades most of its 6.8 million active clients actually place, and still runs one of the most profitable financial businesses built in India this decade.

That trick — give away the trade everyone sees, charge for the trade few talk about — is the whole story of how a bootstrapped broking firm from Bengaluru outgrew banks with balance sheets a hundred times its size, and why a single regulatory circular from the Securities and Exchange Board of India (SEBI) could knock 23% off its profit in a single year, as it did in FY25.

Quick facts

What they do

Zerodha is India’s second-largest stockbroker by active client count and, by its own and independent accounts, its most profitable one per client. It lets retail investors and traders open a demat and trading account online and buy or sell stocks, mutual funds, bonds, currencies, commodities and derivatives through its Kite trading terminal, its Coin mutual-fund platform and a set of allied apps built in-house or incubated through its venture arm, Rainmatter. Its customers range from first-time equity investors parking a few thousand rupees a month into index funds to full-time options traders routing thousands of contracts a day, and the business is built to serve both without a human relationship manager in between.

The origin

Nithin Kamath started trading stocks at 17, while still in engineering college, and by his own account went “bust trading” in the 2001-02 crash. To fund a second attempt, he worked night shifts at a call centre between 2004 and 2005, then became a sub-broker for Reliance Money, where he said he broke volume records across a network of more than 1,000 sub-brokers, according to StartupTalky’s account of the founders’ history. His younger brother Nikhil, seven years his junior, dropped out after the 10th grade, sold used cellphones, worked a call-centre job of his own and traded independently, taking his own hit in the 2008-09 crash. Nithin has since said in a 2023 interview with Business Today that the founding moment was realising “Nikhil is a better trader than I am” — so instead of competing for the same trades, the brothers split the roles: Nikhil would keep trading, Nithin would build the brokerage. The insight that became Zerodha was narrower than “make investing easy” — it was that a percentage-based brokerage model punishes exactly the volume-heavy, low-margin trading the Kamaths themselves did, and that a flat fee structure, sold direct online with no sub-broker layer skimming a cut, could undercut every full-service broker in the country on the trades that mattered most to a serious trader. They launched on 15 August 2010 — India’s Independence Day — with a target so modest that Nithin has said an early email set success at just 10,000 customers, a bar Zerodha would eventually clear by more than a thousand times over.

The struggle years

The first year was thin. Zerodha closed its opening year with roughly 3,000 trading accounts, and the model’s biggest obstacle was not technology but perception: retail investors read “discount” as “inferior,” and a company with no advertising budget had no easy way to argue otherwise, per StartupTalky’s account of the period. Rather than buy trust with ad spend the brothers did not have, Zerodha built Varsity, a free stock-market education platform, betting that an educated trader would eventually self-select into a low-cost broker on the strength of the arithmetic alone. That bet took years to pay off; discount brokers as a category held only about 4% of India’s broking market in FY14, four years after Zerodha’s launch, before rising to roughly 28% by FY20, a trajectory reported by Business Today’s review of the discount-broking wave. Even after Zerodha overtook the market leaders on client count, the company kept acknowledging operational strain in public: in its own “11 years of Zerodha” post published on Z-Connect in August 2021, the company named customer support as its “primary” continuing weakness and set a target of sub-six-hour response times it had not yet hit. Kite itself has been dogged by periodic outages on high-volatility and expiry days for years, with disruptions reported as recently as 2024, according to Business Standard and Moneylife coverage of Kite login and order-execution failures — an unglamorous but persistent cost of running a low-fee, high-volume platform with no human backstop at the scale Zerodha operates.

The turning point

The moment Zerodha stopped being a challenger and became the market leader arrived quietly in January 2019: YourStory reported that Zerodha closed the month with 8.47 lakh active clients against ICICI Securities’ 8.44 lakh, a wafer-thin 3,000-account lead that nonetheless ended a decade in which a bank-backed full-service broker had always been India’s largest. It could have stayed a footnote. Instead, the COVID-19 crash of March 2020 turned an entire generation of newly housebound Indians into first-time traders, and Zerodha’s own account-opening rate — cited by Business Today’s December 2020 review of the discount-broking boom — jumped from about 70,000 new accounts a month in late 2019 to nearly 250,000 a month by April 2020, even as markets were collapsing around new investors. By October 2020, Zerodha was reporting more than 26 lakh active NSE clients, roughly triple its January 2019 count in under two years, an escalation covered in the same Business Today piece alongside runner-up Upstox’s own COVID-era growth. That single compounding event — a paper-thin lead turned into an unassailable one by a pandemic nobody planned for — is the reason Zerodha, not a bank-backed incumbent, defined the next five years of Indian retail investing, even though its own lead would later be overtaken in turn.

The money behind it

There are no named backers in this section because there are none to name: Zerodha has never taken a rupee of venture capital, private equity or debt funding, and Nithin and Nikhil Kamath are reported to own the company outright, a structure both Zerodha’s own communications and independent reporting on India’s unicorns describe consistently. What exists instead of a funding history is a self-assessed valuation that outside list-builders have tracked over time: the 2024 Hurun India report placed Zerodha fourth among India’s unlisted companies at roughly ₹87,750 crore (about $10.5 billion), a figure Startup Story reported as a 50% jump year-on-year, while the 2025 Hurun Global Unicorn Index instead placed Zerodha at the very top of India’s unlisted-company rankings but at a lower figure of about $8.2 billion, per Outlook Business’s and Barchart’s coverage of the same report. Both numbers are Hurun’s own estimates rather than prices paid by an outside investor, and the drop between the two years lines up with Zerodha’s own FY25 revenue and profit decline. What the company has instead of investor cash is its own balance sheet: cash and bank balances of ₹22,769 crore as of FY25, according to Business Wire Disrupt’s reporting on the company’s regulatory filings, funding Rainmatter, Zerodha’s in-house venture arm, which by the company’s own August 2024 “14 years of Zerodha” post held stakes in more than 120 companies against a cumulative allocation of about ₹680 crore — effectively Zerodha acting as its own venture capitalist rather than raising one.

How it makes money

Zerodha charges nothing to buy or sell shares for delivery — the trade type most retail investors actually place most often — and instead earns a flat ₹20 per executed order, or 0.03% of trade value, whichever is lower, on intraday equity, futures and options, currency and commodity trades, a fee structure the company says on its own charges page has not changed since 2010. That is the part most outsiders get backwards: because delivery trading is free and visible on every account statement, it is easy to assume Zerodha earns from volume in the stock market generally. It does not. Independent analysis from ratings agency CRISIL, reported by Business Standard in October 2024, found that derivatives contribute 60-80% of a discount broker’s revenue against under a third for full-service brokers — meaning Zerodha’s business is, in substance, a futures-and-options fee collector that happens to also offer free stock investing as a customer-acquisition loss leader. On top of brokerage fees, Zerodha earns interest income on client margin balances held with it and on its own treasury — a meaningful line given its ₹22,769 crore cash pile — plus account-maintenance charges, payment gateway fees and a small cut from platform partners such as smallcase. The margin sits almost entirely in the derivatives fee line: delivery costs Zerodha the same server capacity as any other trade but earns it nothing directly, so every rupee of reported profit is effectively subsidised by traders in the futures and options segment, the same segment now under direct SEBI pressure.

The numbers

Zerodha’s revenue and profit, drawn from its Registrar of Companies filings as reported by Business Standard and Inc42 Datalabs, show four years of near-uninterrupted growth followed by the first decline in the company’s recent history in FY25:

Zerodha’s own August 2024 blog post cites a lower FY24 “core” revenue of ₹8,320 crore and profit of ₹4,700 crore, explicitly excluding roughly ₹1,000 crore of unrealised treasury gains that Registrar of Companies filings do count — a reminder that founder-stated numbers and audited-filing figures are not always drawn on the same basis, and this piece uses the filing-based figures throughout for consistency. Either way, the direction in FY25 is unambiguous: both revenue and profit fell for the first time in years, a decline Business Today’s founder-facing coverage and Chandra R. Srikanth’s reporting on X both attributed chiefly to SEBI’s derivatives-market curbs rather than to any loss of underlying client trust.

Where the money comes from

Almost all of Zerodha’s revenue is domestic broking, and within broking, almost all of it is derivatives — there is no meaningful international segment to report, unlike, say, a software exporter. The surprise is less about geography and more about where the company is now pointed for growth outside its core: the 2024 “14 years of Zerodha” post lists Margin Trade Funding, a proprietary treasury book invested in stocks, bonds and gold, Zerodha Capital’s loan-against-securities book (about ₹300 crore in size at the time), Zerodha Fund House — a passive asset-management joint venture with smallcase running over ₹3,000 crore in assets under management — and Ditto, its health and term insurance distribution arm, as the businesses meant to reduce dependence on the derivatives fee line that regulatory circulars can move by double-digit percentages overnight. None of these newer lines are disclosed at a scale that rivals brokerage yet; they represent direction of travel, not current mix, and the company has been explicit that broking still funds everything else.

The risks

The clearest risk is regulatory concentration. Zerodha’s own August 2024 post named four separate SEBI and tax measures — the “true to label” charge circular effective 1 October 2024, tighter index-derivatives contract sizing, a Securities Transaction Tax increase from the same date, and stricter Basic Services Demat Account thresholds — as together threatening revenue declines of 40-80% in the segments they touch, a disclosure unusually candid for a private company with no public shareholders to answer to. The second is client-base erosion: Zerodha, which led India in active NSE clients from January 2019 until it was overtaken by Groww in 2023 according to Business Standard’s reporting at the time, held about 68.47 lakh active NSE clients against Groww’s roughly 1.31 crore as of a May 2026 NSE snapshot reported by Business Today — a gap of nearly two to one that has not narrowed. The third risk is closer to a moral hazard than an operational one: a SEBI study covered by Trendlyne found that roughly 93% of individual retail traders in equity futures and options lost money between FY22 and FY24, with 91.1% of the 73 lakh individual F&O participants in FY24 alone ending the year in the red — meaning the single most profitable line in Zerodha’s income statement is also the one its own regulator has spent two years actively trying to shrink on investor-protection grounds, so further curbs are a standing possibility rather than a one-off event already priced in.

The takeaway

The lesson Zerodha offers past its own industry is about what founders give up when they refuse outside capital: no funding round ever forced Nithin and Nikhil Kamath to chase active-client counts or gross transaction value as a vanity metric, so when SEBI’s rules cut into the one segment that actually paid the bills, the company could absorb a 23% profit decline in FY25 without a layoff headline or a down round, because there was no round to be marked down. Growth funded by your own balance sheet is slower and, as the 2019-to-2023 client-count arc shows, not permanently defensible — Groww’s cheaper, mobile-first onboarding still took the leadership position Zerodha spent a decade building. But it does mean the company that built the free-delivery, flat-fee model can now afford to be patient while regulation reshapes the industry it created, rather than needing to grow through the reshaping at any cost.

Frequently asked questions

Is Zerodha listed on the stock exchange?

No. Zerodha is privately held, entirely by the Kamath family, and CEO Nithin Kamath said in a June 2025 interview reported by Business Today that being publicly listed is “tough for a company like us,” ruling out a near-term IPO.

If equity delivery trades are free, how does Zerodha make money?

Delivery trading carries zero brokerage, but intraday equity, futures and options, currency and commodity trades carry a flat ₹20 per order (or 0.03% of trade value, whichever is lower). Independent analysis from CRISIL, reported by Business Standard in October 2024, found derivatives contribute 60-80% of a typical discount broker’s revenue, which is where most of Zerodha’s brokerage income sits.

Who owns Zerodha, and has it raised any funding?

Zerodha has never raised external venture capital, private equity or debt funding. Nithin and Nikhil Kamath are reported to own the entire company, funding its growth from its own operating profit since 2010.

Is Zerodha still India’s largest stockbroker?

No. Zerodha led India by active NSE client count from January 2019, per YourStory’s reporting at the time, until Groww overtook it in 2023, according to Business Standard. As of a May 2026 NSE snapshot reported by Business Today, Groww held about 1.31 crore active clients against Zerodha’s roughly 68.47 lakh.

What is Zerodha worth?

There is no funding-round valuation because there has been no funding round. The Hurun India report placed Zerodha’s self-assessed value at about ₹87,750 crore (about $10.5 billion) in 2024 and at about $8.2 billion in its 2025 Global Unicorn Index, per Startup Story’s and Outlook Business’s coverage respectively — both company-stated estimates rather than prices set by an outside investor.

Sources

Figures are as of September 2026. Currency converted at $1 ≈ ₹96.0 as of 18 September 2026 (Trading Economics).

• IndianStartupNews, “Zerodha fails to cross Rs 10,000 crore revenue mark in FY25; net profit falls 23% to Rs 4,237 crore,” September 2025
• BW Disrupt, “Zerodha Revenue Falls In FY25 As Profit Drops 23%,” September 2025
• Inc42, “Zerodha FY24: Profit Jumps 61% YoY To INR 4,700 Cr, Revenue Grows 21%” and Inc42 Datalabs company financials page, September-December 2024
• Business Standard, “Zerodha profit and revenue up 39% at Rs 2,907 cr and Rs 6,875 cr in FY23,” September 2023
• Business Standard, “Zerodha posts Rs 4,964 cr revenue and Rs 2,094 cr profit in FY22,” January 2023
• Zerodha Z-Connect, “Business updates: 14 years of Zerodha – The Pivot,” August 2024
• Zerodha Z-Connect, “11 years of Zerodha,” August 2021
• Zerodha, “Our company, history, and the people behind it” (About page), accessed September 2026
• YourStory, “With 8.47 lakh clients, Zerodha takes lead as largest broker in India,” January 2019
• Business Today, “Zerodha, Upstox demolish traditional broking biz; customers the ultimate winners,” December 2020
• Business Today, “‘I quickly realised that Nikhil is a better trader than I am’: Nithin Kamath on the origins of Zerodha,” July 2023
• StartupTalky, “Zerodha Success Story: Founded | Founders | Business Model | Revenue Model | Journey,” accessed September 2026
• Business Standard, “Groww topples Zerodha to become largest broker in terms of no of clients,” October 2023
• Business Today, “Zerodha, Groww, Angel One, Upstox: How active clients changed in past 8 years,” April 2026
• Business Standard, “‘True to label’ circular and CRISIL discount-broker impact coverage,” October 2024
• Trendlyne, “SEBI curbed F&O, but investors found another way to borrow” (citing SEBI study on F&O trader losses FY22-FY24), 2025
• Startup Story, “Zoho and Zerodha Among India’s Most Valuable Unlisted Companies in 2024 Hurun Report,” February 2024
• Outlook Business / Barchart, coverage of Hurun Global Unicorn Index 2025 ranking Zerodha, 2025
• Business Today, “‘Tough for a company like us’: Nithin Kamath says Zerodha IPO unlikely,” June 2025
• Zerodha, “Charges” page (brokerage fee schedule), accessed September 2026

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