Discount brokerage firm Zerodha announced its financial results for FY24.

What Happened: According to a company update released on Tuesday, Zerodha’s revenues for FY24 gained 21% to ₹8,320 crore from ₹6,875 crore in the previous year. The firm’s profitability also soared, reaching ₹4,700 crore compared to ₹2907 crore in FY23.

Nithin Kamath, Zerodha’s CEO and co-founder said that the company’s net worth has 40% of customer funds. Despite the strong performance, Kamath says the company might be seeing a hit in its financials due to various regulatory changes from this year.

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SEBI’s true-to-label circular will go live on October 2, which is expected to cause a 10% dip in revenue. SEBI had also issued a consultation paper on limiting index derivatives. “We expect this paper to materialise into regulation sometime in the next quarter. Index derivatives today are a significant portion of our revenue, and any change will impact us. We anticipate a 30% to 50% drop in revenue”, Kamath said.

There is also an increase in securities transaction tax (STT) from October 1 which has a significant impact on futures trading.

Other hits include changes with the new Basic Services Demat Account (BSDA) thresholds set by the regulator combined with the removal of account opening charges could contribute to a meaningful drop, Kamath added. The stock exchange’s new circular directing payout to referrals from authorised persons registered with stock exchanges may also affect customer growth.

Kamath also pointed out the risk of a bull market ending at any time which could cause a significant drawdown.

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