Chapter 8

The listed dealers

Published 30 September 2026

If Zerodha is the dealer that built a mountain of cash, the listed brokers are the dealers that have to explain the mountain every quarter - and their own earnings calls say the quiet part into a microphone. Pull the transcripts. The dependence is not alleged. It is disclosed.

Angel One's Q4 FY25 earnings call: F&O was 77% of the company's gross broking income in the quarter - down from a range of 81% to 87% across the previous eleven quarters. Sit with that number. Not 77% of traders using F&O. Seventy-seven percent of the money the brokerage earns from broking comes from the derivatives segment - the segment where the company's own regulator has measured 91% of the human participants losing. Four out of every five rupees in the broking till, from the product with the worst documented outcomes in Indian finance.

The quarter the tap was tightened

Angel One's Q4 FY25 was the first full quarter after SEBI's October 2024 tightening, and the call reads like a weather report from inside the machine. Total orders fell 22.4% sequentially to about 327 million. Gross broking revenue fell 22.6% sequentially. Reported profit after tax fell 38% quarter on quarter. Nothing about the company's operations broke. The regulator reduced the number of weekly expiries, made contracts bigger and pricier, and the order flow - the lifeblood - dropped by a fifth in three months. A business whose revenue falls by a fifth when the casino's hours are shortened is telling you, in audited language, what business it is in.

And yet the full-year numbers held up, which is its own revelation. FY25 gross revenue was ₹5,250 crore, up 22.6%, with profit after tax of about ₹1,170 crore, up 4%. Even in the year the regulator tightened the tap, the dealer grew. The tap was only tightened in November. The first half of the year - the old rules, the full casino - was enough to carry the P&L.

The second engine: lending them the stake

Buried in the same call is the business line that completes the picture. Angel One's average client funding book was ₹4,030 crore - up 98.8% year on year. After a QIP, the period-end funding book had soared 2.2 times to ₹3,860 crore. Client funding - margin trading facility - is the broker lending customers money to trade with. The customer who has already lost ₹46,000 in year one can now borrow against his holdings and trade bigger. The broker earns interest on the loan and brokerage on the bigger orders, win or lose. The dealer is also the moneylender, and the moneylending arm doubled in the same year the losses were documented.

The fastest-growing dealer

The third dealer at the table grew faster than either. Groww - Billionbrains Garage Ventures - tripled its FY25 net profit to ₹1,819 crore, and its IPO analysis records revenue growth of 49.5% in FY25, on top of 128.6% in FY24. Groww's brand is mutual funds and first-time investing - the friendly green app your cousin uses for SIPs. But the revenue engine under the brand runs on the same active-trader order flow as everyone else's, and the FY25 numbers say the engine is humming. The friendly face and the casino floor are the same building.

Cheap money for an expensive habit

The moneylending arm deserves a closer look, because the pricing tells you who it serves. In November 2024 Angel One cut its margin-trading interest rate from 18% to 14.99% - a three-percentage-point price cut, weeks after the F&O tightening, on the product that lets losing traders bet bigger. When the regulator restricts the casino, the dealer responds by discounting the stake money. The interest income is already material: gross interest income was about 32% of Angel One's total gross revenues in Q4 FY25. Nearly a third of the business is now lending - much of it secured against the portfolios of the same customers whose trading losses the regulator has measured.

Understand the loop and you understand the decade. The broker earns brokerage when you trade, interest when you borrow to trade more, and fees when you lose and need to roll. At every step the meter runs in its favour, and at no step does the meter care whether you win. A business model this perfectly insulated from customer outcomes has a name in every other industry. In this one it is called democratisation of the markets.

What the calls don't say

Nowhere in any of these transcripts will you find the number 91%. The calls talk about "client activity", "softer market conditions", "regulatory impact on retail clients", "normalization of business by exit quarter". The language of the sell-side has no word for the fact that the regulator measured the customer base and found nine in ten of them losing. The closest Angel One's call comes is a sentence about regulations having "impacted retail clients" - the clients were impacted, yes, the way a net impacts fish. The dealers report the weather. They do not report the crop failure, because the crop failure is the revenue model: the same quarter Angel One's broking income fell 22.6%, its management guided for margins to "bounce back" to 40-45%. Bounce back on what? On the crowd returning to the table. It always does. The regulator's own persistence data - three in four losers still trading after two straight losing years - is the safest guidance assumption in Indian finance.