Zerodha Capital’s Profit Climbs 20% in FY26 as Lending Business Gains Momentum

Zerodha Capital, the lending arm of the Zerodha Group, reported a strong financial performance for FY26, with net profit rising 20.5% year-on-year to ₹14.7 crore. The company’s loan book expanded significantly to ₹580 crore, reflecting growing demand for loans against securities (LAS) among retail investors and highlighting the increasing importance of lending as a complementary business within India’s rapidly evolving brokerage ecosystem.

The performance comes at a time when India’s fintech and wealth management sectors are witnessing a shift beyond traditional broking revenues. As regulatory changes reshape derivatives trading and brokerage margins come under pressure, firms are increasingly exploring adjacent financial services such as lending, wealth management, insurance, and advisory offerings.

For Zerodha Capital, FY26 marked a year of accelerated growth driven by its expanding loan-against-securities business, a segment that allows investors to borrow money against their existing holdings in shares and mutual funds without liquidating their investments.

Revenue Growth Outpaces Profit Expansion

According to disclosures cited by rating agency ICRA, Zerodha Capital’s total income rose 44.2% to ₹53.5 crore during FY26, compared with ₹37.1 crore in the previous financial year. The growth significantly outpaced profit expansion, reflecting the company’s aggressive scaling strategy and increased lending activity. The rise in income was primarily supported by the rapid growth of its loan portfolio. As of March 31, 2026, the company’s loan book stood at approximately ₹580 crore, marking one of its strongest annual expansions since launching lending operations in 2021.

Industry analysts note that the growth demonstrates increasing acceptance of loan-against-securities products among retail investors who prefer leveraging their investment portfolios rather than taking unsecured personal loans. Unlike traditional personal loans, LAS products generally offer lower interest rates because the borrowing is secured against financial assets such as shares and mutual funds.

A Growing Opportunity in India’s Wealth Market

The success of Zerodha Capital reflects a broader trend unfolding across India’s financial services industry. India’s retail investor base has expanded dramatically over the past five years. Millions of first-time investors entered the stock market following the pandemic, attracted by digital investing platforms, rising financial awareness, and improved access to capital markets.

This surge in participation has created a large pool of investors holding significant financial assets. As a result, products such as loans against securities are emerging as attractive alternatives to conventional borrowing. Instead of selling investments to meet short-term cash requirements, investors can pledge their holdings and obtain credit while continuing to participate in potential market gains.

This concept has become a key pillar of Zerodha Capital’s business model.The company offers loans ranging from ₹25,000 to ₹10 crore against approved stocks and mutual funds, with loan-to-value ratios typically around 50%. Interest rates generally range between 10% and 11%, often making the product cheaper than unsecured personal loans offered by banks and non-banking financial companies.

Leveraging Zerodha’s Massive Customer Base

One of Zerodha Capital’s biggest advantages is its access to the extensive customer network built by the parent brokerage. As of May 2026, Zerodha had approximately 68.5 lakh active clients on the National Stock Exchange, representing roughly 15% of the exchange’s active investor base. This makes it one of India’s largest retail brokerage platforms.

The lending arm benefits from this ecosystem by offering financing products directly to investors who already hold securities through Zerodha’s platform. Industry experts say this integrated model gives the company a significant competitive advantage. Customer acquisition costs remain relatively low, underwriting becomes more efficient due to access to portfolio data, and cross-selling opportunities increase substantially.

As more investors seek liquidity without disrupting their long-term investment strategies, loan-against-securities products are expected to witness growing adoption.

Asset Quality Remains Strong

While rapid loan growth often raises concerns regarding credit quality, Zerodha Capital has thus far maintained a strong asset quality profile. According to ICRA, the company reported nil gross non-performing assets (GNPAs) as of March 31, 2026. This indicates that none of its outstanding loans had turned bad during the reporting period.

The relatively low credit risk associated with LAS products contributes to this performance. Since loans are backed by marketable securities, lenders can monitor collateral values in real time and take corrective action if market conditions deteriorate. However, experts caution that these products remain exposed to market volatility. Sharp declines in stock prices can affect collateral values and create operational risks if not managed effectively. For now, Zerodha Capital’s risk management framework appears to be delivering positive results.

ICRA Reaffirms Ratings, Expands Credit Facilities

Further strengthening investor confidence, rating agency ICRA reaffirmed Zerodha Capital’s long-term rating at [ICRA]AA- with a Stable outlook and its short-term rating at [ICRA]A1+.

The agency also increased the rated amount of the company’s fund-based bank facilities from ₹600 crore to ₹900 crore, providing additional financial flexibility as the business scales its lending operations.

ICRA cited several factors supporting the ratings, including:

• Strong linkage with the Zerodha Group
• Established brand recognition
• Access to a large retail customer base
• Healthy asset quality
• Improving profitability
• Comfortable capitalisation levels

The ratings agency also highlighted the strategic importance of Zerodha Capital within the broader Zerodha ecosystem.

Nithin Kamath Highlights LAS Opportunity

The company’s growth also aligns with comments recently made by Zerodha founder Nithin Kamath regarding the underutilisation of loan-against-securities products in India.

Kamath noted that many investors continue to opt for higher-cost personal loans despite holding substantial investments that could potentially serve as collateral for cheaper borrowing options. His remarks reflect a broader industry belief that India’s LAS market remains significantly underpenetrated compared to more mature financial markets. As awareness grows, industry participants expect increased adoption among investors seeking liquidity while preserving long-term investment positions.

Challenges Remain

Despite the strong performance, Zerodha Capital remains a relatively small player within India’s broader lending landscape.

The company’s loan book of ₹580 crore is considerably smaller than financing portfolios reported by some competitors. Industry data shows that larger broker-backed financing businesses continue to operate at much greater scale.

ICRA also noted that the company’s lending operations remain concentrated within a single product category. While LAS products offer attractive risk-adjusted returns, dependence on a single lending segment could limit diversification opportunities in the future. Additionally, the business remains exposed to fluctuations in capital markets. Extended market corrections could affect collateral values, investor sentiment, and borrowing demand.

Looking Ahead

The coming year will likely be crucial for Zerodha Capital as it seeks to build on its recent momentum.

The combination of a growing retail investor base, rising awareness of secured lending products, and the strength of the Zerodha brand provides a favourable foundation for expansion. At the same time, maintaining asset quality while scaling the loan book will remain a key challenge. For the broader fintech sector, Zerodha Capital’s FY26 performance highlights an important trend: India’s next wave of financial innovation may not come solely from trading platforms but from the ecosystem of services built around them.

As brokerages evolve into full-service financial platforms, lending businesses such as Zerodha Capital could play an increasingly important role in shaping the future of retail finance in India. With profits growing, loan disbursements accelerating, and investor participation continuing to rise, Zerodha Capital appears well positioned to capitalise on that opportunity in the years ahead.