Zerodha founder and CEO Nithin Kamath shared a reflective annual letter this week as the brokerage marked its 16th anniversary.
In his post, he wrote: “Zerodha turned 16 this month. Sweet 16. Every year, I write a letter to all our customers about what’s happening in the business and how we are thinking about the future.
The last couple of years have been mixed for brokers. We had to take revenue hits because of regulatory changes, and then the Indian market peaked in September 2024. Volumes steadily declined after that, and growth has been muted, to say the least. So while the bull run may not have ended, it has definitely taken a pause. Internally, though, there’s a bull market in our enthusiasm. Despite all the growth over the last 10 years, our team has remained more or less the same. Our core team across tech, product, business, and operations is still very small. This has helped us move faster, and AI has now given us another boost in our ability to iterate quickly on products and ideas.
There is serious work happening across Kite, Coin by Zerodha, Console, and pretty much all our products and services.
Our NRI experience has gotten significantly better, and the latest SEBI consultation paper, if it goes through, will make investing for NRIs easier than ever. There is also significant work going into US investing. Our content initiatives across Zerodha Varsity, Zerodha Markets, and Zerodha continue to get a lot of love from investors. Through Rainmatter and the Rainmatter Foundation, we continue to support startups, individuals, and organisations trying to solve significant problems for India and some of the most pressing problems facing humanity.
The fall in market activity has also meant fewer new people coming into the markets. But our customers’ AUM continues to grow. We are now the largest broker in India by AUM, and ultimately, that is the number that matters to us. It is also a sign of the trust customers place in us. That being said, one area of the business continues to worry me: MTF, or margin trading funding. Our MTF book has now grown to about ₹9,000 crores.
The problem with leverage is that it gives you a boost when things are good. But when things go bad, they can get bad really, really quickly.Indian markets are still shallow, and liquidity can evaporate quickly if markets fall. We are already heavily dependent on F&O activity. Add the leverage through MTF, and a sharp downturn can become a double whammy.
This is why we have spent years trying to make Zerodha resilient to whatever may come. A lot of work has gone into diversifying the business through Zerodha Capital, the Zerodha AMC, and the investments we are making through Rainmatter.
But ultimately, what matters most is the promise we made when we started Zerodha. The philosophy has remained the same from day one: don’t do unto others what you don’t want done unto you. For us, that means not pushing or peddling unsuitable products. No triggering customers to trade or do things that may be bad for them. It means not annoying customers and not doing anything that could lead to a loss of trust, even if doing the right thing means taking a revenue hit. Pretty much everything about Zerodha has changed over the last 16 years.
The philosophy, and the promise we made to you, haven’t. Thank you for all the love over the years.”
Alongside the note, Kamath shared charts showing Zerodha’s revenue and profit trajectory over the years, as well as the steady rise in assets under management, which now stands at over ₹8 lakh crore (and more than ₹9 lakh crore including NSDL figures).
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