New Delhi [India], August 27 (ANI): Zerodha Founder and CEO Nithin Kamath said the brokerage is increasingly focusing on assets under management (AUM) rather than active-client market share, as the company marks 16 years of operations amid a slowdown in market activity and new account additions.
In his 16th-anniversary update, Kamath said the pace at which Zerodha is adding new accounts has moderated as the broader market has not performed strongly. He noted that the decline in account additions coincided with the market peaking in September 2024.
However, Kamath said the company is paying closer attention to the amount of money held by its customers rather than the number of active clients trading through the platform.
"That said, the one number I look at closely is our assets under management (AUM). The money in the trading account can come and go, but AUM typically sticks around. This AUM number is what matters to a stockbroker," he said.
According to the data shared by Zerodha, the company had AUM of around Rs 9.05 lakh crore, making it the largest among the stock brokers shown in the data. ICICI Securities followed with around Rs 8.96 lakh crore, while Groww and Mirae Asset Sharekhan had AUM of around Rs 3.58 lakh crore and Rs 3.27 lakh crore, respectively.
Kamath also pointed to a divergence between Zerodha's share of active customers and its share of retail AUM. The company's share of active customers on the NSE has declined to 15.2 per cent, according to the data shared by the company. However, Kamath said its share of retail AUM continues to grow.
"Market share of active customers tends to be volatile, can be gamed, and is often a distraction," Kamath said.
The shift in focus comes at a time when the company's growth in new users and overall trading activity has slowed significantly. Kamath attributed the moderation to the pause in the bull market, while noting that the IPO segment continues to remain strong.
"Like I always say, with broking, we have to keep running just to stand still," he said, explaining that the nature of the broking business makes it difficult to rely on the benefits of compounding.
He said the money earned through annual maintenance charges increases with the number of clients, but contributes only around 2 per cent to Zerodha's revenue. The rest of the business remains dependent on customers continuing to trade.
Zerodha's financial numbers also show the impact of the changing market environment. Revenue stood at Rs 7,464 crore in FY26, while profit after tax (PAT) was Rs 4,283 crore. Both numbers remained below the company's FY24 peak, when revenue stood at Rs 9,973 crore and PAT reached Rs 5,495 crore.
Brokerage revenue declined from Rs 3,600 crore in FY24 to Rs 3,066 crore in FY25 and Rs 2,738 crore in FY26. At the same time, net transaction charges fell from Rs 810 crore in FY24 to Rs 400 crore in FY25 and zero in FY26.
Kamath said Zerodha's margin funding business, or MTF, has provided some predictability to revenue since its launch in December 2024. Delayed payment and MTF income rose from Rs 22 crore in FY25 to Rs 448 crore in FY26.
"With the start of the MTF (margin funding) business in Dec 2024, there's been some predictability in revenue, since we earn interest income on it. MTF currently makes up ~10% of our revenue," he said.
Despite the slower pace of account additions, Kamath said the company remains focused on building its business and products. He said Zerodha is also preparing to launch US investing and mutual fund transactions on Kite.
He also highlighted the role of technology and artificial intelligence in the company's operations. According to Kamath, fewer than 100 people across tech, product, business and operations run the business. He said AI is helping the team iterate and build products faster without compromising on quality.
As Zerodha enters its 17th year, Kamath's update therefore points to a shift in emphasis from simply adding more trading accounts towards building and retaining a larger pool of customer assets on the platform. (ANI)
Kamath says Zerodha's focus is shifting from active clients to AUM as it turns 16
