Zerodha Company Analysis

What is Zerodha?

Zerodha is one of India’s leading stock brokers in terms of active customers. Zerodha has a clientele base of around 10 million with 6.2 million active clientele. It contributes approximately 20% of India’s exchange turnover volumes for retail trading. 

Zerodha holds 17.42% of Indian market share and it conducts an average of 9–10 million transactions every day as a broker. The primary objective of Zerodha is to increase Indians’ involvement in the financial markets.

How did Zerodha come into existence?

On August 15th, 2010, Nithin and Nikhil Kamath started Zerodha, the first business to present the idea of discount brokerage in India. In their seven years in business, they have rocked the market with low operation charge, no brokerage on equity investments, and new offerings like the direct mutual fund platform COIN and the technologically advanced platforms KITE, all of which were introduced in the first week of April.

Prior to working as a telesales executive, Nithin and his younger brother were passionate traders. He was a proprietary trader, a portfolio advisor, and a sub-broker with Reliance Money while he was engaged in his trading firm. This offered him the expertise and experience to bridge the gap between someone who was willing to invest and someone who didn’t know where or how to invest. This inspired him to create this online tool to assist users in comparing rates and making the best financial decisions.

Zerodha generates 5% of the daily market turnover on different Indian exchanges. The NSE’s (National Stock Exchange of India) decision to offer free platforms to online brokers at that time served as the primary catalyst for this start-up. BSE (Bombay Stock Exchange) and multi-commodity were still inaccessible to them at the time they gained entry to the NSE. Technology was the only and most significant expense they had.

This bootstrapped start-up asserts that their one plan strategy, in which every customer is treated equally and receives the same offer, has allowed them to scale up and continues to do so. Another element that contributed to their expansion was their brokerage calculator, which Nithin claimed was totally open, which is essentially the opposite of how the stock market often operates.

How does Zerodha work?

As mentioned earlier, Zerodha is India’s largest discount broker; especially, for traders and investors who are looking for cheap commissions, simple interface, and a reliable trading platform.

For customers who prefer to trade without a broker’s help, Zerodha is a well-known online stock broker. Only online trading services are available to customers at Zerodha, an online discount brokerage. It uses mainly technology to serve its consumers and has a limited number of offices and branches. Despite offering low-cost trading, technology allows them to expand and reduce operational costs, enabling them to maintain significant profits.

What is a discount brokerage model?

A discount broker is a stockbroker that fills buy and sell orders for clients with low incomes or modest investment amounts at a lower commission rate. The discount brokerage model favors traders who take significant futures and options provisions and exempts consumers from any broking fees on trades and transactions. Instead, a trade is assessed a set price, up to Rs. 20, regardless of its amount. Zerodha was the first brokerage in India to entirely eliminate brokerage fees for equities investments in December 2015.

The primary advantage of using discount brokers is that they offer cheaper commission costs than full-service brokers. However, working with discount brokers has a significant drawback in that the client is in charge of the majority of the investment process; as a result, using a discount broker is not thought to be a wise choice if the client lacks investing experience.

What makes Zerodha so successful?

Zerodha is a corporation that has eliminated lots of trade barriers. It is the first discount brokerage firm in India. Zerodha has made a name for itself in the stockbroking sector in this digital age. The business has expanded solely on the basis of technology by providing worthwhile services to its clients. Five individuals made up the first team of Zerodha, which currently numbers more than 1200 staff. The Kamath brothers’ original concept and excellent use of technology have elevated this startup to the position it holds today.

What led the company to success ?

One of the primary factors behind Zerodha’s success as a business is the cost-efficient and technology efficient services provided to their clients. Apart from this, there are other key points that justifies the success of the company that are as follows;

  • The founders noticed that there is a significant disparity between the commissions demanded by competing brokerage firms and the sum of money that clients actually get.
  • With an eye toward providing services at a reasonable price, they sought to build a more intelligent platform that enables customers to trade online pleasantly.
  • They attracted younger clientele, who typically stay away from trading due to hefty commission costs.

The “low margin and high-volume model” is the foundation of Zerodha’s business strategy. Due to Zerodha’s minimal transaction fees charged to dealers, there is typically a significant volume of trading. This expense distribution of lower sums from a larger number of clients generates a sizable profit for Zerodha. Operational costs are another element promoting high profits for the company.

Fundamental figures and facts related to Zerodha

The income model for Zerodha is not simple. However, it is debatably one of India’s most popular trading networks. This platform is used by traders all across the country for trading and investing.

The company charges ₹20 or 0.03% of each F&O (Futures & Options) and intraday equity trading, whichever is lesser. The platform makes money since it facilitates a lot of transactions. In addition, the business charges ₹300 per year for account upkeep. 

In the last few years, the company has experienced a sharp rise in its customer base. Nevertheless, this resulted in more than 2% of investors using its platform to trade on the stock exchange, which eventually boosts Zerodha’s revenue.

Zerodha earned recognition when, without ever having sought out investment, it valued itself at $1 billion. And as of right now, according to the Hurun Global Unicorn List of 2020, the company is worth an astounding $3 billion.

While Zerodha no longer makes direct investments, it has started raising funds and supporting cutting-edge Indian fintech businesses called “Rainmatter.” Rainmatter has so far invested in 11 companies, 7 of which have been lead investments. Their latest investment was made on January 28, 2021, when GrowFix raised $2 million. The following list shows the investments made by Rainmatter;

  • They made a seed round investment of $300K in on December 30, 2019.
  • They made a pre-seed round investment of $400K in ImStrong Health & Wellness on March 20, 2020.
  • They made a seed round investment of $3.5 million in GoldenPi on June 18, 2020.
  • They made a seed round investment of $27 million in Walnut Knowledge Solutions on September 9, 2020.
  • They made a venture round investment of $100 million in ERPNext on November 24, 2020.
  • On January 28, 2021, Rainmatter made a $2 million seed round investment in GrowFix.

SWOT Analysis of Zerodha

Like any other company, Zerodha has its own set of strengths and weaknesses. Similarly, the company equally has certain opportunities and threats, which we will discuss in detail, below.

  • Zerodha has an advantage over its rivals thanks to the user-friendly interface it offers to users.
  • The user base of online trading is growing, and it is primarily made up of younger people because every child enjoys using digital interfaces. Due to the COVID-19 epidemic, the trading sector has been experiencing a boom period, and credit will soon be extended to trade applications due to the fact that the terms of savings and investments have now been distinguished.
  • Since its founding more than ten years ago, the business has had tremendous success; no other app is now experiencing anything comparable. In terms of finance and earnings, it is one of India’s top startups. Zerodha has a strong brand presence.
  • The user base for the app is strong. The activeness of users’ activity is expected given that it is an online trading program.

  • Zerodha makes no marketing-related expenditures at all. Even though it doesn’t require marketing expenditures, there are still some sectors that require marketing to raise awareness.
  • Although the software is user-friendly, it frequently requires maintenance and has several technical issues.
  • The customer care services provided by the company are claimed to be inefficient.

  • Zerodha has a huge clientele base. Certain additional services that are offered by their rivals, such as mutual funds, AMCs, etc, are not included in the business strategy of Zerodha. It ought to concentrate on broadening the scope of its offerings. The brand has a limited number of chances that make further expansion viable.
  • Despite being the finest in the business, the brand may consider improving its customer service, removing a hindrance to its reputation.
  • The company has huge potential for growth if it is able to provide full trading services like HDFC, ICICI, etc.

  • To compete with its rivals like Groww, Upstox, and Angel Broking, the brand must build a supporter base.
  • The inherent threat of new competitors in the market cannot be stopped; rather, it will only continue to change with the times.

Zerodha doesn’t spend much money on traditional marketing channels because the company believes in promoting itself through its services. The business has a stellar reputation in the industry because of its exceptional services and engagement with clients. Despite having a high reputation, Zerodha will always be in danger of losing market share to both current rivals and fresh competitors.

Who are Zerodha’s main competitors?

Nithin and Nikhil Kamath, two brothers, launched Zerodha in 2010, one of the few bootstrapped firms in India that provides services like online brokerage, currency and commodity trading, futures and options, mutual funds, and bonds. Now that we already have an idea of what Zerodha is all about, let’s take a moment to quickly review the competitors of the business.

Upstox – Discount Stock Broker

Upstox is an India-based technology-driven, low-cost brokerage service that provides trading possibilities at incomparable pricing. On the Upstox Pro web and Upstox Pro mobile trading platforms, the company provides trading in a variety of markets, including equities, commodities, currencies, futures, and options.

Angel Broking – Full Services Broker

Angel Broking (currently known as “Angel One” to serve as a provider of all financial needs) is an Indian brokerage founded in 1987. It participates in the Bombay Stock Exchange, National Stock Exchange of India, Multi Commodity Exchange of India Limited, and National Commodity & Derivatives Exchange Limited. It participates as a depository in Central Depository Services Limited (CDSL). The company has franchisees and sub-brokers in over 900 cities around India.

ICICI Direct – Full Service Broker

ICICI Securities offers retail clients a trading and investment service called ICICI Direct. The business has a network of locations spread all across India and also provides its services online. The company’s primary website,, provides online equity trading, derivatives trading, mutual funds, initial public offerings (IPO), fixed deposits, bonds, NCDs, wealth products, insurance, loans, etc. All of these services are accessible to ICICI Direct customers with a single account.

Groww – Full Service Broker

A mutual fund and stock investment can be made using Groww, an online investment platform. The company, with its headquarters in Bangalore, Karnataka, collected over $140 million by April 2021, priced at $1 billion.

5Paisa – Discount Stock Broker

Prominent online stock broker provides Indian retail investors with discounted brokerage services. The founders of IIFL (India Infoline) have advocated the professionally run and publicly traded 5paisa Capital Ltd. The business had over 1.2 million customers as of March 2021.

HDFC Securities – Full Service Broker

A subsidiary of the Indian private bank HDFC Bank, HDFC Securities Limited is a provider of financial services. With branches in all of India’s main cities, including Mumbai, HDFC Securities was founded in 2000. According to the most recent report, HDFC Securities will be launching discount brokerage. Therefore, Zerodha should proceed with extreme caution.

There are more competitors in the market battling against Zerodha to claim the majority of the market share. However, we’ve only included the top six competitors in this list.


Zerodha has become a name in the security brokerage industry. The simple and customer focus approach of Zerodha has made a simple effort by duo brothers into a multi-billionaire business. Zerodha has been able to deal with the changing business dynamics so far. But, changing the business environment doesn’t allow any business to enjoy any position longer.


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