Zerodha Secures SEBI Nod for Merchant Banking Arm
Zerodha has received SEBI approval to operate as a merchant banker via its subsidiary Zerodha Corporate Advisors, with plans to focus on IPOs for new-age
Zerodha has secured approval from the Securities and Exchange Board of India (SEBI) to operate as a merchant banker. The license was granted to its wholly-owned subsidiary, Zerodha Corporate Advisors Pvt Ltd, and will allow the firm to manage initial public offerings (IPOs) and advise companies on equity fundraising.
Mohit Mehra, whole-time director at Zerodha Corporate Advisors, told Inc42 that operations are expected to begin within the next few months. "We are now setting up operations and expect to be up and running over the next few months," he said. The subsidiary's initial focus will be on equity IPOs, particularly for new-age businesses seeking public market capital.
The Merchant Banking Foray
Zerodha deliberately refrained from soliciting business before the license was approved. Mehra stated the firm will now build its mandate pipeline in the coming months. To meet revised regulatory net worth requirements, Zerodha infused ₹55 crore into the merchant banking business. The company has housed this operation in a separate entity to maintain clear separation from its core stockbroking activities and strengthen compliance safeguards.
This move represents a significant diversification for Zerodha. It expands the company's reach beyond its foundational stockbroking platform.
Financial Performance and Market Context
The diversification comes as regulatory changes and softer trading activity impact Zerodha's primary business. According to the report, Zerodha's brokerage revenue fell 10.4% to ₹2,738 crore in FY26 from ₹3,066 crore in FY25. Net transaction charges dropped to zero from ₹400 crore a year earlier following SEBI's true-to-label framework implementation.
Despite this decline in trading-linked income, the company's net profit rose 1.2% year-on-year to ₹4,283 crore in FY26. Other revenue streams showed mixed results.
| Financial Metric | FY25 | FY26 |
|---|---|---|
| Brokerage Revenue | ₹3,066 Cr | ₹2,738 Cr |
| Net Transaction Charges | ₹400 Cr | ₹0 Cr |
| Net Profit | ₹4,231 Cr | ₹4,283 Cr |
| Interest Income | Not Explicitly Stated | ₹2,269 Cr (fell ~4% YoY) |
| Revenue from Delayed Payment Charges & MTF | ₹22 Cr | ₹448 Cr |
Its margin trading funding (MTF) book reached approximately ₹9,000 crore in FY26, with customers borrowing about ₹6,000 crore. This business contributed roughly 10% of the company's revenue. Founder and CEO Nithin Kamath has, however, cautioned against encouraging customers to borrow merely to boost revenue, citing the risks of leveraged investing.
Competitive Landscape and Other Initiatives
Competition in India's retail broking market has intensified. In July 2026, rival Groww reported 1.31 crore active clients, nearly double Zerodha's 67.62 lakh. Groww added over 70,000 active clients that month, while Zerodha lost around 38,000. Zerodha's share of the National Stock Exchange's active-client base stood at 14.88%.
Zerodha has maintained that active-client market share is not the best performance metric. The company instead highlights the assets held on its platform, which stood at ₹9.05 lakh crore in FY26. Beyond merchant banking, Zerodha is broadening its product portfolio with plans to launch US stock investing and expand its NRI business. Its venture capital arm, Rainmatter, continues to invest in startups, and the firm is working on enabling mutual fund transactions on its Kite broking platform.
