Zerodha‘s market share among active traders has dropped from 22% in early 2023 to around 16% at this point due to fierce competition. However, the company’s market share of client assets is around 10% of all assets handled by retail and high-net-worth customers in the country.
Zerodha, the largest brokerage firm in the country by sales, witnessed a 15% decline in its topline and net profitability in FY 25 as a result of many regulatory changes, most notably the Futures and Options (F & O) trading laws.
The Bengaluru-based company warned that revenues in FY 26 might decline by an even more significant 40 percent from FY 24 in an annual blog post.
Zerodha’s net profits decreased from around Rs 5,500 crore in the previous fiscal year to Rs 4,200 crore in FY 25. The company’s revenue was around Rs 8,500 crore in FY 25 compared to over Rs 10,000 crore in FY 24.
The changes made to the rules
In a blog post, founder and CEO Nithin Kamath explained that Zerodha’s revenues and profits took a hit last year due to multiple factors. These included the hike in securities transaction tax (STT) on options, the curbing of option expiries to just two weekly contracts, the higher limit for Basic Services Demat Accounts (BSDA), removal of rebates on exchange transaction charges, and an overall slowdown in market activity — developments the company had already anticipated.
Since most of these adjustments started to take effect in October 2024, the impact was relatively minor in FY 24; however, the prognosis for the current fiscal year is much worse.
“We are suffering a major impact of almost 40 percent in brokerage revenues in the most recent quarter (June 2025) compared to the same quarter last year,” Kamath said.
The competitive environment
It is noteworthy that Groww, a business that plans to go public, only reported a 10% decline in revenue for the June quarter. Groww, which has the largest number of active investors in the country, reported a threefold growth in profits to Rs 1,819 crore in FY 25.
During FY 25, the Bengaluru-based fintech had a 31% growth in revenues at Rs 4,056 crore, mostly due to the company’s expansion trajectory. In an attempt to diversify its revenue streams away from F & O trading, it has been focusing on wealth products.
The business models of most brokerages rely on the income generated by active option traders. Since its peak, revenues at publicly listed Angel One have dropped by over 30%.
Due to impending regulatory changes aimed at discouraging F & O trading, Zerodha’s Kamath issued a warning that the company could have to charge for the delivery of stocks.
Zerodha could consider altering its business plan.
Authorities are debating whether to outright prohibit weekly options, which might further jeopardize the options market. If this happened, we would have to start charging brokerage on stock delivery arrangements to keep the business profitable, Kamath added.
Due to intense competition, Zerodha’s market share among active traders has dropped from 22% in early 2023 to around 16% at this point. However, the company’s market share for retail and high-net-worth customers is around 10% of the country’s total assets under management (AUM).
The state of the market
Despite four consecutive months of positive market gains, the top four brokers in the country lost around 20 lakh active investors in the first half of 2025, according to data from the National Stock Exchange.
Investors attribute a sharp decline in their active clients for the second consecutive quarter to waning interest in futures and options (F&O) trading as a result of stricter rules implemented by Sebi last year.
Groww, Zerodha, Angel One, and Upstox — the four largest brokers in the country by number of active investors — collectively lost almost six lakh active investors in June after a challenging first half.