Zerodha’s profit zooms 86% to ₹2,094 cr; revenue up 81.9%
Nithin Kamath-led online broking firm Zerodha posted record revenue and profit in FY 2021-22, thanks to around 80% rise in its operating revenue. Increasing interest among retail investors in India and the rising number of IPOs that hit Dalal Street in FY22 also contributed to its higher profit.
Zerodha's profit jumped 86.6% to ₹2,094 crore from ₹1,122 crore in the previous year, while its revenue recorded an 81.9% jump to ₹4,963 crore from ₹2,729 crore in the year-ago period, the data shared by Zerodha with the Registrar of Companies (RoC) shows.
Zerodha, which primarily makes money from brokerage fees, the sale of its core products, and onboarding charges, saw its expenses rise to ₹2,164 crore in FY22, up 71.7% from ₹1,260 crore in FY20. A major chunk of Zerodha's revenue -- ₹4,129 crore -- came from fees and commission, up from ₹2,252 crore in the year-ago period.
Valued at $2 billion, Zerodha has earned itself the rare credit of being a profitable unicorn, with no external funding so far. The company, which handles 15-18% of the trading volumes in the country, has around 10 million customers, making it one of the largest online stock broking firms in India.
Talking about his wealth creation mantra, Zerodha's founder and CEO Nithin Kamath spoke to Fortune India last month, in which he said for him, valuations mean nothing because they are all on paper. "Personal wealth is really the money in the bank. We are constantly trying to increase the net worth of the business, which essentially is cash plus assets and that is valuation for us in the true sense," he said.
Talking about why the company has shied away from seeking outer investment, Nithin said: "We have stayed away from investors, and that is what makes us grow as a business. Raising too much money brings obligations."
Unlike its competitors like Upstox and Groww, Zerodha has also shied away from spending much on ads and marketing. "When someone asks me what's your customer acquisition cost, I say ₹200. We charge ₹200 for account opening. So, we make money every time we acquire a customer," he added.
Reacting to the company's performance in FY22, Kamath also put out a tweet yesterday, saying "whenever our financials are out, the headline numbers get all the attention. But I think most people don't appreciate just how cyclical broking is".
He also shared a link to his blog post last month, which said from now on, every six months, the company will publish updates on its business performance and financials, and risks that it faces (and the broking industry in general).
He attributed Zerodha's products and philosophies to the success of its business. "Certain factors have helped our growth, and the industry in general, tremendously. One is obviously the phenomenal bull market in India," said Kamath, adding that developments such as eKYC, online digital signatures, and UPI turned the largely offline industry into a truly online, and paperless one. This, he said, enabled mass participation. "And for us specifically, adoption via word-of-mouth from our customers."