Zerodha, which is India’s largest stock broking platform, may clock a 12 per cent jump in its year-on-year profit at Rs 2,500 crore, a recent report by HDFC Securities stated. Owned by billionaire brothers Nithin and Nikhil Kamath, Zerodha saw a sharp moderation in average monthly demat accounts additions at 140,000-170,000, which is higher than industry levels, despite the downturn in the market due to various global and domestic reasons.
“Zerodha is slated to clock revenue/PAT at Rs 55 billion/25 billion (+10/12 per cent YoY) in FY23E. Core revenue, at Rs 43 billion (net of pass-through charges), comprises brokerage/float income/other charges at 63/27/10 per cent FY23E," the HDFC Securities report said.
"Sharp moderation in average monthly demat additions at 140k-170k higher than industry levels. With a large overlap of customers opening multiple broking accounts in the industry, 65 per cent (higher than pre-pandemic levels) of the additions at Zerodha are new-to-KYC customers indicating first-time investors," the report said.
The bootstrapped Bengaluru-based start-up has about 12 million customers on its platform, of which 2.5 million are F&O users. Of this, 1.5 million are active F&O traders who punch orders at least once a month. The Kite app is targeted at active stock market investors while the Coin app is meant for passive MF investors.
“The top 50 per cent of F&O traders at Zerodha are sticky in nature, semi-professional, and place strategy-based trades. In addition, the top 35 per cent of customers contribute 70 per cent of revenues," the report said.
Last week, Zerodha founder Nithin Kamath shared details on the new monthly users of the brokering platform, wherein he shared a chart describing the Zerodha account opening trend and "midcap 100".
The chart, between January 2018 and January 2023, showcased that the monthly account users on the Zerodha platform have gone up when the Midcap 100 also climbed up.
This trend was seen majorly when the market was bullish. With the entry of 2022, the monthly active users tailed off due to volatility in the market.
Kamath, while sharing the data, said: "Sharing this data because outside observers usually look at headline numbers of trading volumes and assume that broking is a huge opportunity with a large revenue pool that will grow forever."
As per Sebi, the number of Demat accounts in India rose to 11 crore in January 2023, which is up by 31 per cent year on year. However, it was still below the financial year 2021-22 (FY22) average run-rate of 29 lakh.
Experts believe that the considerable rise in demat accounts in the last one year was mainly due to attractive returns given by the equity markets and the ease of account opening process offered by brokers to their clients.
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