Beyond Broking: How Zerodha Is Restacking Its Revenue Pyramid

SEBI's crackdown on derivatives has pushed Zerodha to reinvent itself from a discount broker into a full-stack financial services company.

From merchant banking and secured lending to wealth management and AMC, Zerodha is building new revenue engines to reduce its dependence on trading income.

Can India's largest discount broker reinvent itself before trading revenues plateau?

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Zerodha made a name for itself by letting investors easily invest in the stock market and mutual funds. But now it wants to help companies get to the stock market.  

Last month, the company filed an application with SEBI seeking a Category-I merchant banking licence, which would let Zerodha run IPOs, advise on M&As and buyouts, underwrite various kinds of issues and sit at the same table as SBI Capital Markets, Kotak Investment Banking, Axis Capital and ICICI Securities.

Last month, the company filed an application with SEBI seeking a Category-I merchant banking licence, which would let Zerodha run IPOs, advise on M&As and buyouts, underwrite various kinds of issues and sit at the same table as SBI Capital Markets, Kotak Investment Banking, Axis Capital and ICICI Securities.

These are the names one is used to seeing in association with big-name IPOs in India, and Zerodha could soon join them, if SEBI clears the path. More than a dozen firms including Societe Generale Securities, InCred Capital, Haitong Securities India and Capri Global Capital are in the same queue, chasing the investment banking opportunity. 

When we narrow this field down to Zerodha, the focus on investment banking is a shift from its core identity of being a zero-commission, no-frills trading app for retail investors and professional traders. 

But Zerodha’s management believes this is a logical evolution. Somnath Mukherjee, VP of corporate development, told Inc42 that Zerodha can leverage its existing businesses to rope in large institutions and enterprises as clients. 

But Zerodha’s management believes this is a........

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