SEBI has approved Zerodha's application for a merchant banking licence, with the registration completed on September 1, 2026. According to reports from Mint, The Economic Times, and The Hindu BusinessLine, the approval was granted to Zerodha Corporate Advisors, which submitted the application on April 27, 2026 for a Category-I merchant banking licence. The firm will now be able to undertake activities such as managing initial public offerings (IPOs), providing corporate finance and issue-related services, and acting as lead managers to public issues. As per The Hindu BusinessLine, the company will initially focus on equity capital markets, including initial public offerings (IPOs), follow-on issues and related advisory services. Mohit Mehra, whole-time director of Zerodha Corporate Advisors, stated that the firm will start operations over the next couple of months and expects to be most useful on mid- to large-sized issues. The licence is now formally registered, and Zerodha has completed all remaining regulatory processes before full operations can commence.
The merchant banking approval enables Zerodha to offer comprehensive financial services to its client base, expanding beyond its traditional online trading and brokerage services. As reported by NDTV Profit, The Economic Times, and The Hindu BusinessLine, Category-I merchant bankers are full-service intermediaries that can manage IPOs, act as underwriters, oversee mergers and acquisitions, provide business valuations and offer other advisory services. With the latest development, Zerodha now has a regulatory licence to participate on the capital raising side of the market, expanding its role beyond serving investors who buy and sell securities. Currently, the broking house has over 1.6 crore customers, who place billions of orders every year, providing a substantial client base for the new merchant banking services. Mohit Mehra, whole-time director of Zerodha Corporate Advisors, stated that the firm will bring the same low-cost, no-hard-selling approach from the broking side over to issuers and investors. The company can now act as a book-running lead manager, file draft red herring prospectuses, conduct due diligence, manage pricing and coordinate investor roadshows, with firms earning fees from IPO mandates, deal advisory and retainers that often run into tens to hundreds of crores for large transactions.
The investment banking approval positions Zerodha to compete in a growing merchant banking sector, with 12 more applications including those from InCred Capital Financial Services, Neo Wealth Management and Societe Generale Securities India currently filed with SEBI seeking clearance for merchant banking licences. According to Mint, The Economic Times, and The Hindu BusinessLine, In December 2025, SEBI amended rules governing merchant bankers, whereby revising the net worth and liquid net worth requirements and introducing a framework for segregation of activities through separate business units. This regulatory evolution reflects the evolving landscape of financial services in India, with established players like Zerodha joining the competitive space alongside traditional merchant banking firms. The timing of these approvals coincides with India's primary capital market experiencing a revival, positioning Zerodha strategically to capitalize on the expected recovery in capital market activities. With Zerodha's registration, the number of registered merchant bankers has risen to 249, according to the latest SEBI data, providing context for Zerodha's entry into this competitive landscape. As per The Economic Times, SEBI currently has 249 registered merchant bankers, while 10 firms have applied for licences, highlighting the growing demand for merchant banking services in the Indian market.
The merchant banking approval represents the latest addition to Zerodha's diversified business portfolio, which has steadily expanded beyond online brokerage. According to Mint, The Economic Times, and The Hindu BusinessLine, in FY26, Zerodha's profit after tax stood at ₹4,283 crore while revenue was ₹7,464 crore. The company has entered areas such as asset management, lending through Zerodha Capital and investments through its proprietary fund, and has secured registration as a broker-dealer in GIFT City to facilitate overseas investing. Assets under management for Zerodha stood at ₹9.05 trillion on the mutual fund side, while the company's core broking income fell to ₹2,738 crore in FY26 from ₹3,066 crore a year earlier. The revenue mix has shown a shift towards newer income streams, with income from the margin trading facility (MTF) and interest rising sharply over the years, currently accounting for around 10% of the company's revenue. However, Mint reports that brokerage revenue declined from ₹3,600 crore in FY24 to ₹3,066 crore in FY25 and ₹2,738 crore in FY26, with net transaction charges falling from ₹810 crore in FY24 to ₹400 crore in FY25 and zero in FY26. The expansion comes as the company's core broking income has moderated from its peak, with the Bengaluru-based financial services group having entered asset management and lending in recent years.
The investment banking approval comes as Zerodha pivots to AUM as growth slows, with founder and CEO Nithin Kamath noting that the brokerage is shifting its focus from gaining active-client market share to growing assets under management. As reported by Mint, The Economic Times, and The Hindu BusinessLine, the pace at which Zerodha is adding new accounts has moderated as the broader market has not performed strongly, with the decline in account additions coinciding with the market peaking in September 2024. This strategic pivot positions Zerodha to offer comprehensive financial services to its existing clientele, potentially strengthening customer retention and cross-selling opportunities. The firm's entry into merchant banking could increase competition in the merchant banking industry, which is expected to benefit from a strong pipeline of IPOs and other capital-raising activities, with the company planning to expand its NRI business segment following SEBI's consultation paper on simpler onboarding procedures. Notably, Zerodha Corporate can only advise and manage public offerings, including IPO-related transactions through the licence, with the approval not meaning the company is launching an IPO or can automatically underwrite every type of transaction. In a recent business update, Kamath said Zerodha's core holdings within its investment portfolio include Zerodha Capital, Zerodha AMC and Ditto, with the company preparing to launch US investing and mutual fund transactions on Kite.
