Nithin Kamath's comeback trail: Zerodha boss talks broking, investing, and lifestyle changes

That Nithin Kamath is a trailblazer is well-documented by now. As the pioneer of India's online broking industry, Kamath's Zerodha has disrupted many a legacy institution in the last decade-and-a-half, as it scaled to reach a staggering turnover of Rs 8,320 crore, with profits of Rs 4,700 crore in FY24.

But this year has been a lot more than just money or business for the mild-mannered Kamath. In what was his "first real audience interaction" in nine months since he suffered a stroke earlier in January, Kamath dwelled on life, loss and other existential questions besides sharing his thoughts on building a rock-solid fintech business in the time of increasing regulatory scrutiny.

"The thing about stroke is it immobilises you for a while. For 1-2 months, I was questioning a lot about life. I thought I was going to be like this forever, and started making peace with it. But then things got better, and I was on the treadmill two weeks into it," Kamath told YourStory Founder and CEO Shradha Sharma at TechSparks Bengaluru 2024. "It was just a stroke, it had to happen... and it happened," he said.

Cue in a pause...

"But now, I'm back to work five days a week. Everything is as usual. What has changed is I stopped drinking and started saying no to travel," he added with irreverence.

On the business side of things, Zerodha currently manages securities worth a mammoth Rs 5.66 lakh crore, which equals to 10 crore rows of holding. "It is unimaginable... the way the business has grown in the last four years," Kamath shared. "In reality, we are in the middle of serious excesses. When a bull market runs, you don't know how much it can go. But as long as it lasts, we want to be the beneficiaries," he said.

By his own admission, there's almost nothing that "bothers" or "stresses" Kamath on a day-to-day basis because, to put it simply, Zerodha has rarely seen a bad day. India's stock markets have consistently hit record highs in the last decade, bringing in more and more retail investors each year. The total number of demat accounts in the country soared to 17.1 crore at the end of August 2024 from 2.4 crore in 2016. "There has never been a time period when the business was down. So, I don't know how I would react when the business weakens or the market goes down," Kamath admitted.

Nonetheless, he's often the first industry voice to warn all stakeholders about impending regulatory risks that could hurt the broking sector. "Risk is at the forefront of our business. Because broking is like the insurance business. You can make money for 10 straight years, and then one day you could lose it all," he said.

Most recently, Kamath cautioned that discount trading platforms like Zerodha and others could see a potential drop in revenues once SEBI's new regulations around F&O trading kicks in from October 1, 2024. "Next year we will see a 30-40% drop in revenues because of all the new regulations," Kamath revealed, adding, "As for Zerodha, I think we have peaked. Not just us, but the broking industry has peaked in terms of revenues."

Hence, most players are now diversifying to hedge their risks by "building adjacent businesses" to broking. Zerodha, too, has dipped its toes into other fintech segments like loans against securities (Zerodha Capital), insurance (with Ditto), mutual funds (with Smallcase), and more.

"We are partnering with startups where we don't want to be 100% of something. We want to be 60% of something and give entrepreneurial freedom to the founders to build it the way they want. And we give them the backing required in the form of funds and customers, etc.," Kamath explained.

"The industry thinks that you can just replicate success by hiring people and teams when you get big. But you need that entrepreneurial energy around. So, we're going by that route," he added.

Ask him about a public listing—which seems to be the flavour of the season for tech startups now—and Kamath makes no bones about the fact that he is not a fan of it. "One of the reasons we don't want to list is when you list, it starts meaning something. Every year, your whole business focuses on just revenues and profits. We are lucky to be where we are without raising capital. We want to build it the same way. It gives you a lot of freedom to not be answerable or bothered by it [revenues and profits] every day, every month, every quarter," he explained.

"It takes a long time in India to build a profitable and sustainable business. If someone is forcing businesses to exit in 7-10 years, it doesn't work for many," he added.

Slow and steady wins the race. In life, perhaps in business too?