Jio Financial Services Not A Threat To Zerodha: Nithin Kamath

Zerodha cofounder and CEO Nithin Kamath believes that Jio Financial Services’ (JFS) entry into the stockbroking space doesn’t pose as much threat to the company as first-time founders.

“I still feel our real competition is going to be more from first-generation founders who are running, breathing, and always thinking about broking,” Kamath said in a post on X. “I somehow don’t feel it (the competition) is really going to be from incumbents.”

Kamath was expressing his views on the JFS-BlackRock joint venture getting a broking licence from SEBI.

Calling the entity’s entry a “great news”, Kamath said that Jio “probably” has the “distribution might” to further expand the participation in Indian retail investor market beyond the current “top 10 Cr Indians”.

“Many people asked me about Jio-BlackRock getting a stockbroking license. Firstly, this is great news. The biggest issue for the Indian markets is a lack of breadth in participation. We’re largely limited to the top 10 Cr Indians. If anyone can expand the markets beyond the top 10 Cr Indians, it’s probably Jio with all its distribution might,” Kamath said in the post.

However, he also said that “deep pockets” does not imply a large moat in the homegrown stockbroking space. “This is not a business where having deep pockets means you have a large moat. But yeah, I might be wrong.”

Zerodha is one of the leading players in the Indian stock broking space. It reported a 88.95 % jump in its consolidated profit after tax to INR 5,496.3 Cr in FY24 from INR 2,909 Cr in the previous fiscal. Operating revenue stood at INR 9,372.1 Cr during the year under review, up 37.16% from INR 6,832.8 Cr in FY23.

JFS’ Investment Empire

Notably, JFS has been gradually adding new services to its arsenal as it looks to carve a market share in the country’s growing fintech market with its super app approach. Over the past year, JFS has formed three JVs with BlackRock, each focussed on a different part of the investing value chain.

• The first is Jio BlackRock Asset Management, which has already received SEBI approval to launch mutual fund schemes. It has begun with two short-term, low-risk offerings – a liquid fund and a money market fund. These funds are aimed at new investors and come with low entry barriers.
• The second is Jio BlackRock Investment Advisers, which got SEBI’s approval last month to operate as a registered investment adviser. The company was set up in late 2024 and applied for the licence earlier this year.
• The third is Jio BlackRock Broking, which last week received a stockbroking and clearing licence from SEBI.

With this, the company now has the regulatory clearances needed to operate across asset management, advisory, and broking, making it one of the few players in India with such a broad licence base.

Jio’s Distribution Moat

JFS’ biggest strength is the scale and depth of its existing ecosystem. Jio is a well-known brand because of Reliance Jio Infocomm, the telecom operator with 469 Mn telecom users. JFS can leverage this network to introduce broking services to a new and diverse set of customers.

Its full ownership of Jio Payments Bank adds another layer to this strategy. It allows the company to tie together payments, banking, and investing under one roof. This tight integration reduces friction and makes the experience smoother than what most brokers currently offer.

The company has also moved quickly to secure all the necessary licences for stockbroking, clearing, mutual funds, and payments. While many brokers focus only on trading, Jio is positioning itself as a full-service financial platform. This will let it offer bundled products that could keep users engaged for the long term.

For now, it remains to be seen if JFS can crack the Indian fintech puzzle with its bevy of offerings and a big warchest. The journey is not expected to be easy. Incumbents like Paytm and BharatPe are aggressively building their super app dreams one piece at a time (broking, payments and what not), while stockbroking industry titans like Zerodha, Groww and Angel One enjoy unflinching loyalty and a large user base.

Shares of Jio Financial Services ended today’s trading session 0.89% lower at INR 326.7 on the BSE.

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