One of the largest online stock brokers in India, Zerodha, a bootstrapped profitable business, contributes to over 15% of all retail order volumes in India daily by trading and investing.
Highlights:
- Starting in 2010, Zerodha is the largest online broker in India.
- Zerodha pioneered the discount broking model in India.
- Zerodha Varsity, an educational initiative, provides detailed notes on trading and investing.
Capital markets have gained traction in the last couple of years. A total of 1.51 crore investors were registered in Indian depositories last year alone.
Over 9+ million Zerodha clients contribute to over 15% of all retail order volumes in India daily by trading in Futures and options, stocks and IPOs, and currency and commodity derivatives.
Nithin Kamath, the founder, and CEO of Zerodha started the platform in 2010 with his brother Nikhil Kamath. Today, the online platform has changed the dynamics of retail stock investment with a market hold of 18.33 percent of the total active Indian users.
The beginning of Zerodha:
Nithin Kamath, born in Shimoga, Karnataka, stumbled upon trading and the market at the age of 17. Facing the ups and downs of the stock market, Nithin borrowed money and worked up his trading account. As a result of the debt, he worked in a call center for four years. He continued to trade during the day. However, he quit his job when someone asked Nikhil to manage his portfolio.
Gradually, Nithin went on to work as a franchisee of Reliance Money, a brokerage firm. Meanwhile, Nikhil Kamath joined him along with Venu Madhav and Hanan Delvi. Nithin always considered his younger brother to be a better trader than himself.
It helped Nithin to step aside from trading and focus on building a brokerage firm. Finally, in 2010, with a lot of struggle and enough money, the Kamath brothers started Zerodha. Venu(COO) and Hanan(CCO) remain the backbone of the successful platform.
The Zerodha strategy:
Zerodha adopted the blue ocean strategy for Indian markets by tapping the uncontested market. Reducing the brokerage fees and maintaining transparency between its clients helped Zerodha slowly gain attention.
Zerodha was the first platform to introduce a flat fee model (a maximum of ₹20 per trade), helping traders save up to ~90% of brokerage charges compared to the exorbitant percentage fees during that time.
In addition, the platform offered a single pricing plan to all the clients, unlike the then incumbent players who had opaque offerings for different groups of clients.
The highlight of Zerodha was its pricing model.
Pioneering the discount brokerage and transparency model in India helped the earlier investors who faced exuberant brokerage fees shift to the new platform. Additionally, the team invested in technology rather than offline branches.
Moving everything online helped reduce costs and focus more on an efficient online platform. Zerodha also depends on word of mouth and does not spend on advertising and marketing.
The Zerodha Universe:
Several products are a part of the Zerodha universe. The technology of Zerodha involves a list of platforms such as Kite, Varsity, Console, Coin, and Connect. Each of the products serves the purpose of helping investors in a hassle-free trade.
The Kite is an investment trading platform with an interface to search across 90000+ stocks and F&O contracts. The platform also provides advanced charts to understand extensive historical data for stocks and F&O contracts.
Varsity, another product of Zerodha, is an extensive and in-depth collection of the stock market and financial lessons created by Karthik Rangappa(Chief of Education). An educational initiative by Zerodha provides modules on stock market trading, financial models, and strategy.
It helped Zerodha attract non-customers unaware of the stock market trading.
For the financial year 2020-2021, Zerodha reported a 2.6-fold increase in net profit at Rs.1,122 crore and a three-fold increase in revenue at Rs.2,728 crore. In 2021-22, they posted a 60 percent year-on-year jump in both profits and revenues.
Recently Zerodha released a beta version of the “family portfolio” view on its console.
It allows an investor to add up to 10 family member portfolios (Zerodha accounts) and track the consolidated portfolio through one account. With innovations, Zerodha hopes to remain a market leader amidst new competitors such as Groww, Angel broking, and Upstox.
