Zerodha: Trade Winds of Change

Zerodha is a stocks, futures and options, currencies and commodities brokerage business headquartered in Bengaluru with a membership on all major Indian exchanges, including NSE, BSE, and MCX. Started in August 2010, Zerodha disrupted the market with the concept of discount broking in India. All equity investments made through Zerodha are free. For trading, Zerodha charges 0.01 per cent, or Rs 20 per executed order, whichever is lower on all exchanges, including trades for equities (intraday), futures and options, currencies, and commodities.

The Kamath brothers — Nithin Kamath and Nikhil Kamath — are the founders and owners of Zerodha. Nikhil is an astute trader, who has been trading from the age of 14. Although Nikhil has been involved in every faction of the business since Zerodha’s inception, he majorly aimed at creating wealth by trading the markets, while Nithin focused on growing the business operating as the chief executive.

When Zerodha introduced this aggressive brokerage plan, it was the only brokerage to offer discounts, but within a span of five years, 80 per cent of the retail investors trade using an online discount brokerage. The impact Zerodha has had on the Indian retail trading space can be measured by analysing the number of online traders using discount brokerages to trade. Zerodha has a daily exchange turnover of over Rs 10,000 crore in all the segments of the markets.

Today, Zerodha is further disrupting the market with its innovation technology products. For instance, KITE — a minimalistic web-based trading platform that adapts to mobiles and tablet — offers everything a traditional platform does, and a lot more, through a very minimalistic interface, and it is available in 10 different regional languages. OpenTrade.in is a Website, which gives real-time trading updates from profitable traders to improve trading decisions. Users can pick and follow traders based on their trading style and verified profitability report. Zerodha Varsity is a free educational initiative by Zerodha with structured content for anyone who wants to learn about the markets. Zerodha Varsity has its own blog-like structure, which allows users to post comments and interact with other users. Then, Zerodha Margin Calculator is a first-of-its-kind tool for users to know the margin requirement of any futures and options position before entering the trade. ZITIR is a proprietary analysis tool developed by Zerodha for long-term investors to study the insider action on any stock.

Zerodha has picked up significant momentum since it started operations in 2010. “Right now, we are the third largest brokerage in terms of earnings in India and we expect to become the largest brokerage within the next year. We are already the largest brokerage in terms of retail turnover on the exchange,” says Nikhil Kamath, co-founder of the discount brokerage startup.

Zerodha’s trading desk has exceeded expectations year on year and their risk management desk has seen over 3,00,000 trades per day. Today, Zerodha has over 1,50,000 clients, who have been acquired slowly and steadily over a period of six years.

Currently, Zerodha is available only in the Indian markets, but it is planning to reach out to other markets in Asia, before expanding further. “The kind of innovation in technology that Zerodha has introduced are not available in most of the global markets and this is a screaming opportunity for Zerodha to enter the international market,” Kamath says.

Zerodha was a bootstrapped organisation from the savings of the Kamath brothers. The initial trading profits helped scale up as that was put back into the business.

ZERODHA
Category: 3-7 years
Founders: Nithin Kamath & Nikhil Kamath
What it does: Provides end-to-end discount brokerage services
Year of founding: 2010
Growth Potential: To tap the entire investor and trader community
Revenue: Rs 150- 200 crore in FY16
No. of employees: 350

ayushman@businessworld.in