Zerodha
Zerodha is India's largest discount stockbroker, built on flat-fee trading and options volume.
On the record
Checkpoint: SEBI decision on Zerodha's Category-I merchant banking licence application
The call
Zerodha keeps its licence, its cash, and its profit margins, but Groww is taking the customers and SEBI is taking the F&O revenue that funded them.
Zerodha is an online brokerage firm in India that lets retail customers buy and sell stocks and other investments. It has government licenses and bank-level safeguards that prevent new competitors from easily entering the market, which should protect its survival for at least 3 to 5 years. However, Zerodha is losing customers and market share to a direct rival called Groww (which now has more active traders), and its profits fell 23 percent and revenue fell 11.5 percent in the last fiscal year. The biggest threat is that India's financial regulator recently capped profits from futures and options trading, which was Zerodha's main money-maker, and this new rule caused brokerage revenue to drop 40 percent in the first quarter of the current year. The company is trying to grow new business lines like a fund management operation and a lending service, but the question for investors is whether these new businesses can replace the profits the regulator took away, which will become clear when full-year results come out in September through November 2026.
Why
01
AI pressure: None apparent. No AI product is displacing Zerodha's brokerage model; the pressure here comes from regulation and a peer broker, not automation. Could AI do the core job? Unlikely.
02
Bigger players: Groww. Groww passed Zerodha in active clients and is grabbing about 75% of the industry's net-new signups most months. Could a giant copy it? Probably.
03
What protects it. SEBI licences, exchange membership, and custody rights that any new entrant needs years to get, plus 15 crore-plus in cash reserves.
What would change this call
SEBI decision on Zerodha's Category-I merchant banking licence, expected around Sept-Oct 2026. Approval would show new revenue lines are materializing to offset F&O losses; rejection would deepen reliance on shrinking brokerage income.
Zerodha's FY26 full-year results due Sept-Nov 2026, especially brokerage revenue trend after Q1's ~40% drop. Shows whether the brokerage revenue collapse is stabilizing or worsening over a full year.
NSE active client counts for Zerodha versus Groww reported quarterly through FY27. Indicates whether Zerodha's client base erosion to Groww continues or levels off.
Zerodha's FY26 full-year results due Sept-Nov 2026, especially brokerage revenue trend after Q1's ~40% drop. Shows whether the brokerage revenue collapse is stabilizing or worsening over a full year.
NSE active client counts for Zerodha versus Groww reported quarterly through FY27. Indicates whether Zerodha's client base erosion to Groww continues or levels off.
Key numbers
- FY25 revenue fell 11.5% to ₹8,847 crore
- Active clients dropped from 78.88 lakh to 68.93 lakh
- Q1 FY26 brokerage revenue down about 40% YoY
Named risks
- SEBI F&O curbs and STT hikes continue to compress core brokerage revenue.
- Active client attrition to Groww erodes distribution advantage and future revenue base.
- Pending SEBI merchant banking licence could be rejected, closing off new revenue diversification.
- Heavy reliance on brokerage-linked income leaves Zerodha exposed to further regulatory tightening.
Rivals, as read in July 2026
| Rival | Direction | Evidence |
|---|---|---|
| Groww | gaining on | Overtook Zerodha with 1.29 crore active clients vs 68.93 lakh, April 2026 |
| Groww | gaining on | Captured ~75% of industry net-new client additions in some 2026 months |
| Angel One | contesting | Third-largest broker also losing share, ~66-68 lakh active clients FY26 |
| Upstox | gaining on | Wrong direction for Upstox: its share fell fastest, 5.58% to 4.35% FY26 |
| ICICI Securities | gaining on | Grew active clients in FY26 while most discount brokers shrank |
Questions people ask
- Is Zerodha profitable in 2026?
- Yes but declining. Zerodha posted FY25 net profit of ₹4,237 crore, down 22.9% year on year, its first ever annual profit decline, per RoC filings reported November 20, 2025. Q1 FY26 brokerage revenue fell roughly 40% year on year, disclosed by founder Nithin Kamath in September 2025.
- Is Zerodha losing market share to Groww?
- Yes. Zerodha's active NSE clients fell from 78.88 lakh to 68.93 lakh between FY25 and FY26, while Groww grew to about 1.29 crore active clients and roughly 28% market share, overtaking Zerodha as India's largest broker by active clients as of April 20, 2026.
- Who owns Zerodha?
- Zerodha is 100% privately owned by the Kamath family, founded by brothers Nithin and Nikhil Kamath in 2010. It is fully bootstrapped with no external venture funding, and founder Nithin Kamath reiterated on September 16, 2025 that Zerodha has no plans to go public.
- Could AI replace Zerodha?
- Not the licensed broker itself. Zerodha launched Kite MCP in May 2025, letting AI assistants like Claude and Copilot query live portfolio data, but custody, KYC and money movement legally require a SEBI-licensed broker, so Zerodha positions AI as a feeder tool, not a replacement.
- What is Zerodha's biggest competitor?
- Groww is Zerodha's biggest threat, having overtaken it in active NSE clients (1.29 crore vs 68.93 lakh as of April 2026) and reportedly capturing around 75% of the discount brokerage industry's net new client additions in 2026.
- Is Zerodha planning an IPO?
- No. Founder Nithin Kamath said publicly on September 16, 2025 that Zerodha has no IPO plans, preferring to stay bootstrapped and avoid investor pressure, despite unofficial market chatter placing its valuation near $8 billion in early 2026.
Timeline
- 2026-07-13H1 2026 data shows Zerodha active NSE clients slipped further to about 68 lakh
- 2026-06-29Zerodha's SEBI Category-I merchant banking licence application confirmed pending
- 2026-04-30Zerodha Fund House AUM hits ₹13,133 crore, ahead of Groww's ₹4,730 crore
- 2026-04-20Groww overtakes Zerodha as India's largest broker by active NSE clients
- 2026-04-15Zerodha files for SEBI Category-I merchant banking licence
- 2025-11-20FY25 filings show revenue down 11.5% to ₹8,847 crore, first ever annual decline
- 2025-09-30Kamath discloses Q1 FY26 brokerage revenue down about 40% year on year
- 2025-09-16Kamath reaffirms Zerodha has no IPO plans
- 2025-05-31Kite MCP launched, connecting AI assistants to live Zerodha portfolio data
- 2025-01-31Zerodha launches margin trading facility, scaling toward ₹7,400 to 8,500 crore book
Head to head
Revision history
22 July 2026
First assessed. Losing its protection. The text above is fixed as of this date and is not edited afterwards.
In the same band
Sources
- Zerodha cash reserve stands at Rs 22,679 Cr in FY25 (2025-11-20)
- Zerodha sees 40% drop in brokerage revenue in Q1 FY26; signals business pivot (2025-09-30)
- Zerodha revenue drops for the first time in FY25 (2025-10-01)
- Zerodha, Groww, Angel One, Upstox: How active clients changed in past 8 years (2026-04-20)
- NSE active client growth stalls in first half of 2026 (2026-07-13)
- How Zerodha Is Restacking Its Revenue Pyramid (2026-07-21)
- Zerodha Eyes Investment Banking Push (2026-06-29)
- Nithin Kamath On How Zerodha Built $8 Bn Business With Just 1,000 Employees (2026-07-07)
- Zerodha Broking Number of Employees 2026 (2026-06-29)
- Connect your Zerodha account to AI assistants with Kite MCP
- Introducing Kite Terminal Mode
- Zerodha now wants to enter investment banking space (2026-06-29)