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Stockbroking major Zerodha has received SEBI’s approval to operate as a merchant banker through its wholly owned subsidiary Zerodha Corporate Advisors Pvt Ltd. The approval comes months after Zerodha applied for a Category I merchant banking licence through the subsidiary. “SEBI has granted the merchant banking registration to Zerodha Corporate Advisors. We are now setting up operations and expect to be up and running over the next few months,” Mohit Mehra, whole-time director at Zerodha Corporate Advisors, told Inc42. He said Zerodha Corporate Advisors’ initial focus will be on equity IPOs, “particularly new-age businesses looking to raise capital from the public markets”. Zerodha had infused ₹55 Cr into the merchant banking business to meet the higher net worth requirement under the revised regulations, Mehra said. “We deliberately refrained from soliciting business before the licence was approved, and will build the mandate pipeline over the coming months," he added. Zerodha has housed the merchant banking business in a separate entity to maintain a clear separation from its broking operations and strengthen compliance safeguards. Zerodha Looks Beyond Stockbroking The merchant banking foray is part of Zerodha’s broader diversification push as regulatory changes and softer trading activity weigh on its core stockbroking business. Zerodha’s brokerage revenue fell 10.4% to ₹2,738 Cr in FY26 from ₹3,066 Cr in FY25. Net transaction charges also fell to zero from ₹400 Cr a year earlier following the implementation of SEBI’s true-to-label framework. Despite the decline in trading-linked income, Zerodha’s net profit rose 1.2% YoY to ₹4,283 Cr in FY26 from ₹4,231 Cr in FY25. Its interest income fell about 4% YoY to ₹2,269 Cr, while revenue from delayed payment charges and its MTF business surged to ₹448 Cr from ₹22 Cr in FY25. Zerodha’s MTF book reached around ₹9,000 Cr in FY26, with customers borrowing about ₹6,000 Cr. The business contributed roughly 10% of the company’s revenue. However, founder and CEO Nithin Kamath has cautioned against encouraging customers to borrow merely to boost revenue, citing the risks associated with leveraged investing. Meanwhile, competition in India’s retail broking market has intensified, particularly from Groww. In July 2026, Groww had 1.31 Cr active clients, nearly twice Zerodha’s 67.62 Lakh. Groww added more than 70,000 active clients during the month, while Zerodha lost around 38,000. Zerodha’s share of NSE’s active-client base stood at 14.88%. However, Zerodha has maintained that active-client market share is not the best measure of its performance, pointing instead to the assets held on its platform, which stood at ₹9.05 Lakh Cr in FY26. The company is also broadening its product portfolio, with plans to launch US stock investing, and expand its NRI business. Its venture capital arm, Rainmatter, continues to invest in startups. Zerodha is also working on enabling mutual fund transactions on its broking platform Kite.
document fetched 2026-09-04 02:54 · canonical https://inc42.com/buzz/zerodha-gets-sebi-nod-for-merchant-banking-to-focus-on-new-age-ipos