STOCK BROKING IS dominated by companies concentrated in Mumbai but Bengaluru-based Zerodha Broking Ltd., started in 2010 by brothers Nithin & Nikhil Kamath, has broken the mould. While in the '90s, Infosys showed the country how talented people from middle class can build a successful business and create humongous wealth, the brothers represent the next generation with similar value systems and beliefs, going on to build a financial services company with over 10 million customers. Without raising money from investors, the brothers have a wealth of over ₹31,360 crore, up 121% from ₹14,130 crore in 2022. They have been the biggest gainers in the Fortune India Rich List (from 96 to 47) among unlisted companies as their company nearly doubled its operating income in FY22 to ₹4,964 crore as against ₹2,730 crore in FY21. Net profit nearly doubled from ₹1,122 crore to ₹2,096 crore. Zerodha Broking, which houses the trading platform, is privately held with Nikhil owing 28.91% and Nithin 30.91% in personal capacity, the rest being owned by family members and firms owned by them.
For the Kamaths, entrepreneurship started at a young age. Before Zerodha, Nithin worked at a call centre, a rage with youngsters in Bengaluru in the '90s, joined a multi-level marketing network and dabbled in broking as a side hustle. Nikhil, seven years younger, showed a flair for trading in early teens. He remains an active trader and, apart from the one time he was in a hospital for a fortnight, doesn't remember a day when he has not traded.
In all the frenzy around start-up valuations, exaggerated claims and advertisement-driven perception game, Kamath brothers are outliers. Nithin Kamath recently wrote in one of his posts that "most VCs have miscalculated and maybe oversold the India opportunity to their investors (LPs). In a small market like ours with limited M&A opportunities, large exits within seven years (lifecycle of a fund within which founders are expected to give exits) are hard." Also, building a resilient business takes time and VC funding lifecycles aren't really conducive for building one, he says. Without raising a single penny from outsiders, the Zerodha platform accounts for 15% trading volumes in retail space.
Through Rainmatter Fintech, launched in 2016, the brothers have also started investing in start-ups. Rainmatter has partnered with over 80 start-ups and invested close to ₹400 crore over last seven years. "We are increasing our commitment by increasing the allocation by ₹1,000 crore," Nithin wrote in a blog in August. Nikhil Kamath has also co-founded Gruhas along with Abhijeet Pai, which is focused on investments in PropTech, CleanTech, media & entertainment and consumer-focused space. Earlier this year, Nikhil joined global philanthropists like Bill Gates, Melinda Gates, Warren Buffett and Azim Premji in the Giving Pledge. His areas of interests are climate change, energy, education and health.