In the financial sector, the Zerodha business model is a disruptive force. This Indian stock brokerage company was established in 2010 and has completely changed the market by providing zero-commission trading, which allows more people to trade in stocks and commodities.
Understanding Zerodha
An Indian fintech business called Zerodha offers online trading services. You may invest in mutual funds, trade equities, currencies, bonds, commodities, and more here. Zerodha is an Indian financial technology startup founded in 2010 and has revolutionized the traditional brokerage sector with its creative thinking. The company’s name, which combines the Sanskrit words for “obstacles” (Zero and Rodha), symbolizes its goal of demolishing barriers and democratizing the financial industry.
Its free direct MF and no-cost equity delivery are its best features. All you must pay for intraday and F&O trades is INR 20.00. Zerodha’s numerous revenue streams are helping businesses gain momentum within the current fiscal year, 2022. It generated an income of INR 4.964 crore, per its consolidated yearly financial records with RoC.
Zerodha Company Details
| Company Name | Zerodha |
| Origin Country | India |
| Founded | 2010 |
| Founders | Nithin Kamath |
| CEO | Nithin Kamath |
| Headquarters | Bangalore, Karnataka, India |
| Industry | Financial Services, Stock Brokerage |
| Key Offerings | Online Stock Trading, Direct Mutual Funds, Investment Platform |
| Number of Clients | Over 6 million (as of last update) |
| Official Website | www.zerodha.com |
Revenue Sources – Business Model
Zerodha generates revenue from several sources, broken down as follows:
- 70% of Zerodha’s income comes from trading and broking commissions.
- 15% from fixed deposit plus debt investments made by the Treasury
- 3-3.5 percent is made up of float, which is leftover client money kept in short-term fixed-rate accounts (FDs) with clearing firms. The remaining 15% is made up of different costs, including account opening, DP, and yearly upkeep expenses.
With active trading clients supporting non-paying equity investors, Zerodha’s business model permits free equity investing. 10–20% of traders generate 85% of Zerodha’s trading earnings.
Revenue Sources
Brokerage costs: Zerodha receives most of its income from the brokerage fees associated with trades made on its platform. INR 20.00 is the fixed cost that the company charges you for each trade, regardless of the value of the transaction. Seems to be quite advantageous. This function has brought in a sizable clientele. Consequently, Zerodha depends on a high volume of transactions by drawing in new customers rather than raising its transaction fees.
Premium tech product sales: On behalf of several stock exchanges, it offers premium products such as user onboarding collections, Kite Connect API, and exchange transaction fees.
What is the total amount that it received from the fees and services? It brought in 4,129 crore rupees.
Interest accrued on funds: Interest is earned by Zerodha on the money that customers put in their trading accounts. Before you purchase stocks or funds, it generates interest on the money you retain in your trading account. The corporation invests These funds in various financial instruments, which receive interest. These instruments include bonds, government securities, and other short-term instruments. In the fiscal year 2022, the company earned INR 614.5 crore in interest income.
Other sources: In addition, Zerodha makes money from other sources such as mutual funds, corporate actions, margin financing, IPO funding, trading in commodities and currencies, and the selling of other financial products. It brought in INR 220.5 crore in revenue from these sources.
Funding for initial public offerings (IPOs): Zerodha offers funding to its clients that apply via its platform for IPOs. By charging for this service, the business increases its revenue.
Mutual funds: Through its platform, Zerodha provides mutual fund investments and receives commissions from the sale of mutual fund products. This form of income for the business accounts for a sizeable portion of the mutual fund investment’s entire worth.
Margin Funding: Margin funding borrows from the broker to make stock market investments. Zerodha offers this service to its consumers. These loans generate interest for the corporation, increasing its revenue.
Conclusion
Zerodha is an online discount brokerage company based in India that offers trading services for mutual funds, commodities, equities, and currencies. Zerodha’s low-cost, high-volume business model is predicated on the company charging a minimal fee for its services and depending on a sizable clientele to make money. Zerodha’s dedication to offering affordable, intuitive, and technologically advanced products to investors and traders is the cornerstone of its success.
Meet Suhas Harshe, a financial advisor committed to assisting people and businesses in confidently understanding and managing the complexities of the financial world. Suhas has shared his knowledge on various topics like business, investment strategies, optimizing taxes, and promoting financial well-being through articles in InvestmentDose.com
