Zerodha's Revenue Shifts as Brokerage Falls
Zerodha's brokerage revenue fell in FY26, but profits rose slightly. The company now earns nearly 40% of gross revenue from non-brokerage sources like interest and margin trading.
Zerodha's brokerage revenue fell 10.4% to ₹2,738 crore in FY26 from ₹3,066 crore the previous year. The discount broker's overall top line remained almost flat at around ₹8,847 crore, according to a blog post by CEO Nithin Kamath.
Despite this revenue squeeze, profit rose marginally to ₹4,283 crore in FY26 from ₹4,231 crore in FY25. The company's net transaction charges, income earned from exchange-related fee rebates, fell to zero from ₹400 crore due to SEBI's true-to-label norm framework.
New Revenue Streams Prop Up Profits
With its core brokerage engine slowing, Zerodha is increasingly making money from other sources. In the first quarter of FY27, nearly 40% of its gross revenue came from businesses outside its core trading platform.
The primary non-brokerage revenue streams are interest income, delayed payment charges, and margin trading facility (MTF) fees. Interest income from cash balances and other assets was ₹2,269 crore. Delayed payment charges and MTF together generated ₹448 crore in FY26, a sharp rise from ₹22 crore in FY25. The company's asset management business is also generating more fee income, though it remains relatively small.
Regulatory and Competitive Pressures
Regulatory changes have pressured Zerodha's core business. SEBI's derivatives clampdown and RBI's tighter rules for currency futures and options, introduced in 2024, reduced trading activity. Zerodha states these changes led to a 20-30% drop in F&O activity across exchanges and brokers. INR currency F&O volumes fell 90% after the RBI required trades to be backed by an underlying foreign currency exposure.
The divergence with rival Groww is stark. In July, Groww added 70,119 active clients, taking its base to 13.12 million and its NSE market share to 28.88%. Zerodha lost 38,725 clients, leaving it with 6.76 million and a 14.88% share. The entire broking industry added only around 8,000 net active clients that month.
| Metric | Groww (FY24-FY26) | Zerodha (FY24-FY26) |
|---|---|---|
| Operating Revenue Change | Rose from ₹2,609 Cr to ₹4,645 Cr (~78% increase) | Declined from ~₹9,994 Cr to ~₹8,847 Cr |
| Active Client Base (July) | 13.12 Mn | 6.76 Mn |
| NSE Market Share (July) | 28.88% | 14.88% |
Rahul Sharma, head of office research at Equity99, argues the two companies are not competing for the same customer. Groww has focused more on mass-market equity, mutual funds, and SIPs, while Zerodha derives significant revenue from active F&O traders. CEO Nithin Kamath has also stated that the active-client market is not the most important metric.
The Margin Trading Facility Push
Margin trading facility (MTF) is a key new revenue stream. Zerodha launched its MTF offering in December 2024. The company's MTF book has since reached around ₹9,000 crore, with customers borrowing about ₹6,000 crore. Kamath says MTF contributes roughly 10% of the startup's revenue.
This product creates a revenue stream less dependent on trade volume. However, Avinash Gorakhshar, founder of Avinash Mentor Research, said continued regulatory pressure on F&O could make Zerodha's slower diversification into mass-market wealth products a growth constraint. Kamath has acknowledged the risks of leveraged investing and stated the startup does not want to encourage borrowing solely for revenue.
Angel One, with a broadly similar active client base to Zerodha at the end of FY26, is also building its client funding business. Its average client funding book stood at ₹5,305 crore for FY26 and rose to ₹6,783 crore by June 2026.
The Diversification Race
Zerodha's diversification moves have timing challenges. It had a first-mover advantage in digital broking but launched MTF in late 2024 and its AMC in 2023. It is now bringing mutual fund transactions to its Kite platform after keeping the experiences separate for years.
The gap is more visible in wealth management. Groww has moved into the affluent investor segment through its W platform, offering Portfolio Management Services, Alternative Investment Funds, and private market opportunities. Groww entered the segment after acquiring Fisdom in October last year.
Zerodha, by comparison, remains largely a self-directed investment platform through Kite and Coin. Its Zerodha Fund House is an asset management business, distinct from personalised wealth management. Sharma of Equity99 argues Zerodha is making a deliberate trade-off, prioritising profitability over aggressive customer acquisition. The company's AMC is reportedly scaling faster than Groww's assets under management.
