Zerodha CEO Nithin Kamath stated the company is experiencing a revenue plateau and anticipates a significant decline due to new Sebi regulations.
Zerodha co-founder and CEO Nithin Kamath said that the company is currently facing a plateau in revenue while preparing for a significant dip in the same later this year. In a blog post, Nithin Kamath pointed to new regulations from markets regulator Sebi, which are expected to impact the brokerage’s business operations starting October 1 this year.
He noted, “We are already seeing revenue and profit plateau, and we are bracing for a big revenue hit later this year. Sebi’s true-to-label circular will go live on October 1, 2024. We expect a 10% revenue dip”.
Moreover, another regulation on index derivatives could lead to a 30% to 50% reduction in earnings, he said, adding, “Index derivatives today are a significant portion of our revenue, and any change will impact us.”
Nithin Kamath also highlighted changes to the Annual Maintenance Charges (AMC) under the new Basic Services Demat Account (BSDA) thresholds and said, “We can charge full AMC from customers with a demat holding of ₹10 lakhs and more, as opposed to ₹4 lakhs today. Combined with us removing the account opening fee, this would be a meaningful drop in revenue.”