Zerodha FY23 results: Revenue and profit grow by over 40%
What's the story
Zerodha, India's leading stockbroking firm posted a revenue of approximately Rs. 6,875 crore in fiscal 2023.
This represents over 40% year-on-year growth when compared to the previous fiscal year when the company reported a revenue of Rs. 4,964 crore.
Profit after tax for FY23 surged to Rs. 2,900 crore, marking a 45% increase from the previous year's profit of approximately Rs. 2,000 crore.
Details
F&O reliance poses potential risks
Zerodha's revenue primarily comes from futures and options (F&O) traders, with an estimated 45 lakh or 15% of the three crore active traders on stock exchanges engaging in F&O trades.
However, this reliance on F&Os exposes the company to risks in case of regulatory action or market correction.
Zerodha's frugal operations, high net worth, and zero debt provide a cushion against such risks, allowing the company to adapt as needed.
What Next?
SEBI's consultation paper on 'finfluencers' may impact referrals
Zerodha's referral program, which accounts for 10% of its new business, could be affected by the Securities and Exchange Board of India's (SEBI) consultation paper on 'finfluencers.'
CEO Nithin Kamath supports the paper but acknowledges that any regulation could impact the company's referral program.
"The risk is that any regulation around this could also result in us having to stop our referral program," Kamath said in a blog post.
Insights
What is SEBI's consultation paper?
SEBI's consultation paper, released on August 25, outlines proposed regulations to address the issue of unregistered 'finfluencers' in the financial sector.
It aims to restrict the involvement of SEBI-registered entities with these unregistered individuals and proposes measures to disrupt their revenue model, reducing perverse incentives in the ecosystem.
The paper seeks public input before formal regulations are implemented.
Insights
Zerodha, Smallcase partnership to contribute to growth
Within the next two weeks, Zerodha plans to launch new mutual funds schemes in partnership with Smallcase.
This collaboration with the newly registered asset management business is expected to contribute to the company's impressive growth numbers.
"We should be live with our first two funds in the next couple of weeks," said Kamath.