Zerodha co-founder and CEO, Nithin Kamath, announced that the company is facing a plateau in revenue and is preparing for a significant decline later this year. In a blog post, Kamath attributed the expected dip to upcoming regulatory changes by SEBI, which will take effect on October 1, 2024.
Zerodha posted over ₹8,000 crore in revenue for FY24, with profits of around ₹4,500 crore. This marks an increase from FY23, where the brokerage earned ₹6,875 crore in revenue and ₹2,907 crore in profit after tax (PAT). However, Kamath anticipates a 30% to 50% reduction in revenue due to new regulations affecting their operations.
“We are already seeing revenue and profit plateau, and we are bracing for a big revenue hit later this year,” Kamath said. The SEBI “true-to-label” circular, going live on October 1, is expected to reduce Zerodha’s revenue by 10%. Additionally, changes to index derivatives regulations could result in a 30% to 50% decline in earnings, as these products make up a significant portion of the brokerage’s income.
Kamath also highlighted that the new Basic Services Demat Account (BSDA) thresholds will impact their Annual Maintenance Charges (AMC). Zerodha will only be able to charge full AMC on demat accounts with holdings of ₹10 lakh or more, compared to ₹4 lakh previously, further affecting revenue.
The company’s referral program has also been hit by new guidelines from stock exchanges, which restrict payouts to only registered Authorised Persons, significantly reducing the number of referrers.
Despite the challenges ahead, Kamath emphasized that Zerodha remains in a strong market position, though regulatory changes will present obstacles for the business going forward.
