How zerodha make or earn money by allowing the traders investors to Buy and sell thousands of commission-free direct mutual funds?

How zerodha make or earn money by allowing the traders investors to
Buy and sell thousands of commission-free direct mutual funds ?.

I mean at this point most brokers have direct mutual funds (since once 1 firm starts it others have to follow or risk losing clients). They probably earn a lot via Kite + their other paid services.

Kind attn : zerodha ;.
Is this true: u have 100% no earning/making money in MFs ?

We make no money from selling direct Mutual Funds. We maybe end up losing some money because we don’t charge DP charges to the customers. Similarly on equity delivery trades as well, we don’t charge any brokerage. So today, our active traders (intraday and F&O traders) are the only ones through whom we earn. We were charging Rs 50/month for the Coin platform, but we had to go zero when VC’s started funding startups in this space to offer direct mutual funds for free.

Btw, I had written the below post answering all different kind of conspiracy theories on Zerodha.

From that post:

This is parrotted in many different forms by people who don’t understand our business model. That conspiracy is that since we offer free services, we must be mining our client data and selling it to 3rd parties, especially stock tipsters. While most of our clients only invest in stocks and direct mutual funds from which we don’t earn any revenue, we do charge Rs 20 per trade (or 0.01% whichever lower) for F&O and intraday equity trades. 95% of all trading turnover on the exchanges is from intraday equity and F&O trades. We have the largest retail trading community of intraday equity and F&O traders in India trading with us.

Offering free equity investments helps us grow the capital market ecosystem in India and grow our client base. But like I’ve always said, the lion’s share of our revenue comes from the active traders, who execute 15+ lakh revenue-generating trades daily. Do the math and one can know why we are a Rs 500+ crore topline business.

As a technology company, we have kept our operating costs extremely low by developing technology for not just our users, but internally for our operations. We have the highest gross margins and are probably the most profitable retail-only stock broker in India. Both within the industry and internationally, we’re considered a fintech company more than brokerage business.

The largest VC and PE firms in the world have been keen on investing in us at billion-dollar valuations. A leading global bank, in a recent publication, ascribed a multi-billion dollar valuation to us. But, we’ve never raised external money because we’ve always been profitable and have been able to grow on the merits of our products. We’ve never advertised, which cannot be said of our competition who have large budgets for online, print, and TV advertising. The quality of our products and the goodwill we’ve earned from our clients is why we’re the largest broker in India today.


Aren’t you tempted to sell some stake say 10/20 percent to lock in some gains you made from Zerodha and focus on other business opportunities from that money☺️

1 Like

Does Zerodha have plans for going public some time in the future?

:slight_smile: The core competency for most of us running Zerodha is around capital markets. The edge for us until now has been the competency of being in this industry for a decade before Zerodha and now a decade after. It wouldn’t make sense to let go off that edge and try attempting building some other business where you don’t have it.

We are a profitable company, so selling a stake to see money isn’t really required. And after a certain amount, anything incremental doesn’t really make a big difference. So yeah, most of the core team here isn’t really doing this for the money, it is more out of passion. Also, having no external investors gives us another edge of being nimble and the freedom to attempt at all the moonshots.


No plans as of now. :slight_smile:

1 Like