Zerodha’s core business is no longer growing. Regulatory curbs and changing investor behaviour are cooling trading activity and squeezing brokerage revenue. 

Broking revenue fell 10.4% from ₹3,066 Cr in FY25 to ₹2,738 Cr in FY26. Net transaction charges (income earned from exchange-related transaction fee rebates) also fell to zero from ₹400 Cr in FY25 due to SEBI’s true-to-label norm framework. In a blog post, CEO Nithin Kamath hinted that its overall top line remained almost flat in FY26 versus ₹8,847 Cr a fiscal year ago. 

Despite the revenue squeeze, Zerodha kept its bottom line largely intact, with profit rising marginally to ₹4,283 Cr in FY26 from ₹4,231 Cr in FY25.

So, with its core revenue engine slowing, what is keeping Zerodha’s profits afloat? The answer: Zerodha is increasingly making money from sources other than brokerage. 

In Q1 FY27, the discount broker said that nearly 40% of its gross revenue came from the businesses outside its core trading platform.

While these revenue streams are cushioning the impact of falling brokerage income, are they large enough to replace the core business entirely, especially when its arch-rival Groww now has an active client base almost twice the size?

Regulatory changes have added to the pressure on Zerodha’s core brokerage business, particularly by curbing derivatives and currency trading activity. SEBI’s derivatives clampdown and RBI’s tighter rules around currency futures and options (F&O), introduced in 2024, reduced trading activity across segments. 

According to Zerodha, these regulatory changes led to a 20-30% drop in F&O activity across exchanges and brokers.

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