Zerodha is India’s largest retail stock broking platform. It has revolutionised the burgeoning fintech sector in India through its low-cost services, advanced technology and superior customer services. The company is the pioneer of discount broking model in India, disrupting the industry with zero brokerage on equity delivery trades, flat fee on intraday and derivatives trades and in-house technology to minimise costs and enhance accessibility. Thus, Zerodha deviates from the traditional brokerage model which levies high transaction fees. The company provides all its services online with hardly any physical presence to reduce operational costs. Zerodha facilitates trading and investing in various stocks, commodities, IPOs, F&O and others. It serves over 15 million active clients and accounts for around 15% of India’s retail trading volume on a daily basis. Curious about how Zerodha has bested its competitors? Let’s dive into the pillars supporting its business operations.
A Quick Overview of Zerodha’s Business Model
Zerodha operates a low-margin high-volume business model. Its zero brokerage model for delivery trades attracts long-term investors in huge numbers, which has contributed significantly to its massive client base. The company charges a minimal fee on equity, currency and commodity trading, more than making up for the low cost through huge trade volumes. In fact, Zerodha handles 15-20% of India’s retail equity turnover.
Zerodha does not outsource its technological needs because almost all its technological resources are built in-house. This helps in lowering the operational costs. For example, Kite is the company’s flagship trading platform available as a web and mobile app. It enables trading in equities, commodities, F&O and others, handling over 1 million orders daily. The platform integrates various features, including real-time charts with more than 100 indicators, market watch and advanced orders.
Zerodha further reduces its operating costs by not spending much on advertisements and referrals. In fact, it does not even have a sales team and branch offices. Unique stock broking services and brand reputation are the driving factors for the company’s publicity, instead of conventional marketing.
| Company | Zerodha Broking Limited |
| Establishment Year | 2010 |
| Founder/Owner | Nithin Kamath, Nikhil Kamath |
| Headquarters | Bengaluru, Karnataka, India |
| Industry | Financial Services |
| Net Worth | $7.7 billion |
| Revenue In 2024 | $1.1 billion |
How Does Zerodha Make Money?
1. Intraday, F&O, Commodity and Currency Trading
Zerodha charges a flat fee of INR 20 per executed order or 0.03% of the turnover(whichever is lower) for equity intraday, equity futures and options, commodity derivatives and currency derivatives. Although the fee is very low, the company earns profits due to huge trading volumes. This is the company’s biggest source of revenue.
2. Mutual Funds
Zerodha enables its users to invest in mutual funds through its Coin platform. No commission or brokerage is charged from the users. However, the company earns revenue in the form of commissions from the Asset Management Companies or AMCs on assets under management through the Coin platform.
3. Interests on Cash Balances and Client Margins
Zerodha earns interests by lending out cash margins, using collateral in the securities lending and borrowing market or keeping cash in fixed deposits or liquid funds. For the uninitiated, collateral refers to mutual funds or shares that are kept by the clients in their trading accounts.
4. Other Revenue Streams
Zerodha levies one-time account-opening charges. The rates range between INR 200-400, depending upon the account type. Furthermore, the company charges an annual account maintenance fee of INR 300.
Reasons For Zerodha’s Success
Zerodha’s disruptive brokerage discount model drastically reduces the transaction costs, thereby making it highly appealing to cost-conscious traders. As discussed before, Zerodha does not charge any commission on equity delivery trades, while charging a flat fee of INR 20 or 0.03% of the turnover value per executed order for intraday and F&O trades.
Technology is a major contributor to Zerodha’s dominance. The company’s in-house technology stack like trading platform Kite, Coin for mutual funds, Varsity for investor education, back office Q and others are known for their user-friendly features, speed and reliability. Moreover, the tech platforms are built and maintained in-house, leading to lower operational costs than the competitors.
Zerodha is profitable right from inception and operates without external funding. The company has kept costs low and passed on the savings to its customers.
Zerodha has built enormous trust in the industry, driven by no hidden charges, public display of exchange charges and clear pledge rules.
