Zerodha has received approval from the Securities and Exchange Board of India (SEBI) to operate as a merchant banker through its wholly owned subsidiary, Zerodha Corporate Advisors Pvt Ltd, according to inc42.com. The licence was granted months after Zerodha applied for a Category I merchant banking licence. The company plans to focus on equity IPOs, especially for new-age businesses seeking public capital.
Mohit Mehra, whole-time director at Zerodha Corporate Advisors, told inc42.com that the merchant banking operations are being set up and expected to be operational in the coming months. Zerodha infused ₹55 crore into the subsidiary to meet the higher net worth requirements under revised regulations. The merchant banking business is housed in a separate entity to maintain compliance and keep it distinct from Zerodha's stockbroking operations.
This move marks a diversification effort by Zerodha as its core stockbroking business faces regulatory changes and softer trading activity. Zerodha's brokerage revenue declined 10.4% to ₹2,738 crore in FY26 from ₹3,066 crore in FY25, with net transaction charges dropping to zero from ₹400 crore. The merchant banking licence allows Zerodha to expand into capital markets advisory and underwriting, a space dominated by established merchant bankers.
Zerodha Corporate Advisors will initially target new-age companies aiming to raise capital through equity IPOs. The company has deliberately avoided soliciting business before licence approval and plans to build its mandate pipeline over the next few months, according to Mohit Mehra.