India’s largest stock broking platform Zerodha posted a profit surged past Rs 2,000 crore in FY22, at a time when most Indian startups are struggling to attain profitability.
The bootstrapped firm reported a profit of Rs 2,094.4 crore, growing 87% over previous year, according to its filings with the Registrar of Companies (RoC) accessed by data intelligence platform Tofler.
The Bengaluru-based unicorn provides share broking services, financial services and portfolio management consultancy services. It was founded by Nithin and Nikhil Kamath in 2010.
The company reported an operating revenue of Rs 4,963.7 crore in FY22, up 82% over last year. All of this was through sale of services, for which it charges a small fee.
However, chief executive Nithin Kamath had warned of the slowdown in the industry in an update last month.
“We have already seen an almost 50% fall in monthly new account openings from January this year, and this trend has been similar across the industry,” he said.
Co-founder Nikhil Kamath also said in an earlier interaction with VCCircle that investors across the board must be “circumspect” with their trades in the current market.
“While we are on track to do as much revenue and profits as last year, even this year, we think we will be unable to match the current revenues and profitability from the next financial year for a few more years,” Nithin added in the note.
In FY22, the company’s expenses also grew by 72% to Rs 2,164.1 crore in line with company’s expenses, as compared to Rs 1,260.2 crore in FY21.
Its employee benefit expense grew 45% to Rs 459 crore. A large part of this was other expenses that grew 82% to Rs 1,686.5 crore during the year, which included an Information Technology expense of Rs 303.1 crore and miscellaneous expenses of Rs 1,342.4 crore.
The note further highlighted that the industry has “temporarily hit a plateau in terms of the target market, customers who have sufficient savings to invest in the market”
“The business will also most likely get impacted due to the changing regulatory landscape, where, among many things, the working capital requirements are going up quickly, ” the note added.
The stock broking platform led by the Kamath brothers claims to process orders for over 1 crore clients daily. As per its website, transactions on the stock broking platform account for about 15% of the total retail trading volumes in India. The platform’s products are divided into investments and technology offerings.
It allows retail investors to trade in various asset classes including stocks, mutual funds, future & options, fixed income products that allow investment in government-backed securities or sovereign gold bonds, and initial public offerings (IPOs). Some of its key tech offerings offer trading platforms for various use-cases, apart from allowing trading with its partner platforms like Smallcase, Streak, Sensibull, GoldenPi, and Ditto.
Among other trading platforms operating in India, Groww posted over 2.5x growth in its FY22 net profit at Rs 6.8 crore from its earlier Rs 2.6 crore net profit. The online trading platform’s revenue from operations widened about 8x to Rs 348 crore in FY22, against Rs 40.5 crore in FY21.
Its overall expenses in the given fiscal were 775% higher year-on-year at Rs 359.4 crore, with a significant rise seen in its IT expense, which soared to Rs 145.5 crore in FY22 from Rs 16.87 crore in FY21.