Capital Market - Thematic Report - 28 Nov 22

THEMATIC
Capital Market
Racing for diversification
Initiating Coverage on Angel One, ICICI Securities and
Central Depository Services (India)
28 November 2022
Swarnabha Mukherjee
Research Analyst
swarnabha.mukherjee@bksec.com
+91-22-4031 7134
Capital Market
Racing for diversification
Thematic Report | Capital Market | 28 November 2022

Target Upside
Reco The structural story of financialisation continues in India and the shift
price (Rs) (%)
of assets towards financial assets accelerated over the last two
Angel One BUY 1,883 19.4
years. Asset managers, insurers, stockbrokers, wealth managers,
ISEC BUY 680 28.8
exchanges and depositories and their ecosystems remain ways to
CDSL Hold 1,071 (12.6) play this structural story. In this report, we deep-dive in certain areas
of capital markets – brokers and depositories. We initiate coverage
on Angel One (Angel, BUY, Target price: Rs 1,883), ICICI Securities
(ISEC, BUY, Target price: Rs 680) and Central Depository Services
(India) (CDSL, Hold, Target price: Rs 1,071) in this report.
• Brokers and depositories are a direct play on retail participation on

the stock markets, a segment which has seen significant
expansion in the last two years. While trading volumes have
normalised now, onset of an equity culture implies a sustainable
growth from current levels for the medium-term.
• Two clear trends are visible in the stock broking revenue model –
(a) a shift towards ‘per order’ pricing model which would insulate
revenue from volatilities in market and focusing on beefing up
allied revenue in terms of fees and charges – even traditional
brokers are now introducing such pricing plans, (b) entry into
wealth management where revenue pool is distribution
commission driven and is also partly de-coupled to the market
cycles. We find ISEC has already gained ground in wealth
management while Angel is laying down the groundwork.
• As we go ahead, we should see top stockbrokers morph into

technology driven financial supermarkets. The focus currently is on
building Super-Apps and tools for superior customer experiences
during engagement. Both Angel and ISEC is focusing on this.
• The de-coupling (even partly) from market cycles should warrant

higher valuation multiple range than the stockbrokers have
historically traded, in our view. They currently trade at reasonable
valuations in the lower end of their trading range.
• For depositories, diversification of revenue pool opportunities

emanates from governments push in the areas of digitisation of
the financial services value chain, e.g., electronic KYC record
keeping and insurance dematerialisation in the near-term.
• While depositories will continue to directly benefit from expansion

of the capital markets (CDSL with its tie-ups with the discount
brokers has significant market share in demat accounts), the
opportunities in new segments – subject to regulatory impetus –
remains humongous. CDSL is a market leader in the KYC space.
2
Thematic Report
Capital Market | 28 November 2022
Index Page No.

Calm after the storm – time to focus on the structural story in the
4
Indian Stock Broking sector
Discount brokers have capitalised well in terms of augmenting
9
client base in the bull run
Diversifying towards wealth management 20
Investing technology and tech employees 21
Thoughts on valuation of stockbrokers 25
Depositories – unique play on capital market activity 27
Regulatory impetus leads to option value 30
Company Section 32-112
Angel One 32
ICICI Securities 57
Central Depository Services (India) 88
Annexure 113-120
5paisa Capital 114
IIFL Securities 115
HDFC Securities 116
Zerodha 117
RKSV Securities 118
NextBillion Technologies 119
Motilal Oswal Financial Services 120
National Securities Depository 121
3
Thematic Report
Calm after the storm – time to focus on the structural story

in the Indian Stock Broking sector
Financialisation in India continues
The financialisation of savings of Indians, which accelerated FY17

onwards had received a strong fillip during the pandemic period. As
shown in Exhibit 1, it was in FY21, that India’s household net financial
savings exceeded that of household net physical savings as a
percentage of GDP.
The financialisation as the theme can be played through multiple

segments like asset managers, life insurance, stockbrokers, wealth
managers and exchanges. As we see in Exhibit 2, both mutual funds
and shares saw major allocation by households, which had a direct
impact on capital market activity. This had led to a very strong
growth in the domestic stock broking segment – be it in terms of
number of new customers, active clients and demat accounts
opened – also benefiting the depositories.
Exhibit 1: Financialisation of savings in India received a boost in FY21

20
Savings as % of GDP
15
%
10
0
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Household Net financial savings as % GDP Household Physical Savings as % GDP
Source: RBI, B&K Research
Exhibit 2: Shares, mutual funds and insurance were major instruments of financialisation
25
Percentage of gross financial savings
20
15
%
10
0
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Shares and Debentures Mutual funds Life insurance funds Provident and pension funds
Source: RBI, B&K Research
4
Thematic Report
For all capital market indicators, FY21 and FY22 have been outlier
years. All the key indicators of capital market activity saw a rapid
expansion as the equity markets enjoyed a one-and-half year of bull
market conditions after the rapid crash of early FY20 on the onset of
covid. Trading volumes and daily turnovers expanded rapidly and
continues to remain at elevated levels.
Exhibit 4: Derivative ADTO continues to see

Exhibit 3: Cash ADTO saw a jump in FY21 strong growth with increased F&O activity
800 80,000
71,021
722.0
Derivative ADTO
660.4
Cash ADTO
70,000
600 60,000
50,000
391.1
351.8
338.1
Rs bn
Rs bn
400 40,000
27,256
244.1
226.1
213.4
201.5
30,000
183.6
13,959
158.5
130.3
132.7
139.7
9,581
200 20,000
6,707
3,806
2,806
3,126
1,890
1,554
1,152
10,000
1,291
454
724
0 0
FY20
FY22
FY09
FY21
FY10
FY12
FY13
FY14
FY15
FY16
FY11
FY17
FY18
FY19
FY20
FY22
FY09
FY21
FY10
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY11
Source: BSE, NSE, B&K Research
The bull-run also brought in several new to market customers from

Tier 2 geographies and further deep in the country. Customers
signed up with discount brokers and engaged in trading which also
led to large number of demat account additions.
Exhibit 5: Demat accounts in India reach 100 mn+

120
Total Demat Accounts in India
100
80
60
mn
40
20
104.4
100.5
102.6
86.8
84.0
48.6
46.6
49.8
80.6
94.8
64.9
40.0
96.5
44.3
56.9
40.9
59.6
36.8
45.3
36.5
98.3
35.6
35.9
39.6
39.6
39.4
39.3
36.2
43.2
35.2
42.2
62.2
47.6
67.4
89.7
73.8
37.4
70.2
77.2
41.5
40.1
51.5
55.1
53.1
92.1
37.1
0
Apr-19
Jan-20
Oct-20
Jan-22
Dec-19
Nov-20
Jan-21
Oct-22
Oct-21
Feb-20
Nov-21
Jan-19
Mar-20
Feb-22
Jul-22
Aug-22
Oct-19
Nov-19
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Feb-21
Mar-21
Jul-21
Aug-21
Mar-22
May-22
Jun-22
Sep-22
May-21
Jun-21
Sep-21
Feb-19
Mar-19
Apr-20
Apr-22
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Apr-21
Dec-20
Dec-21
Source: NSDL, CDSL, B&K Research
The pace of demat account additions have normalised to an extent

but continues to grow even at a rate higher than pre-Covid levels
despite a higher base. This could indicate catching-up of culture of
investing in the equity markets, shifting away from traditional
savings instruments like fixed deposits and life insurance savings
policies.
5
Thematic Report
Exhibit 6: Demat accounts growth normalising but still above pre-Covid levels
4.0 6
3.0
4
2.0
2
mn
%
1.0
0.6
0.4
3.6
3.4
3.4
3.4
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
2.5
2.5
2.8
2.8
2.0
0.2
2.4
2.9
2.2
0.7
0.7
0.7
2.7
2.7
2.7
1.8
1.8
1.8
1.8
1.8
1.6
1.0
1.0
1.0
1.0
1.3
2.1
1.2
1.7
1.1
0
0.0 Dec 19 (0.6)
(1.0) (2)
Oct 19
Feb 20
Mar 20
Nov 19
May 20
Jun 20
Jul 20
Aug 20
Sep 20
Feb 21
Mar 21
Feb 22
Mar 22
May 21
Jun 21
Jul 21
Aug 21
May 22
Jun 22
Jul 22
Aug 22
Sep 22
Feb 19
Mar 19
May 19
Jun 19
Jul 19
Aug 19
Apr 20
Sep 21
Sep 19
Apr 21
Apr 22
Apr 19
Dec 20
Dec 21
Jan 20
Oct 20
Nov 20
Jan 21
Oct 21
Jan 22
Oct 22
Nov 21
MoM addition Growth
Source: NSDL, CDSL, B&K Research
Exhibit 7: Strong growth in demat accounts post Exhibit 8: Incremental demat account run-rate
onset of pandemic remains stable YTD
40 3.0
Incremental demat accounts 34.6 Incremental demat accounts - YTD
35 2.5 2.7
30 2.4
2.0 2.3
2.1
25
1.8
mn
1.5 1.7 1.7

mn
20
14.2 1.0
15
10 0.5
4 4 5
5 2.5 0.0
Oct-22
Jul-22
Aug-22
May-22
Jun-22
Sep-22
Apr-22
0
FY17 FY18 FY19 FY20 FY21 FY22
Source: CDSL, NSDL, B&K Research
Exhibit 9: FY22 witnessed significant growth in Exhibit 10: NSE active clients showing degrowth
active clients in 1HFY23 due to volatile market environment
20 1.5
Incremental NSE Active Clients Client addition - YTD
17.1
1.0
15
0.5
mn
1.16 0.54 0.26

mn
10 8.1 0.0
(0.30) (0.50) (0.13) (0.69)
(0.5)
5
2.0
(1.0)
0.5
Oct-22
Jul-22
Aug-22
May-22
Jun-22
Sep-22
Apr-22
0
FY19 FY20 FY21 FY22
Source: NSE, B&K Research
6
Thematic Report
Structural story to continue
While FY23 has so far seen reduction in activity, we believe that this
is a normalisation phase that had played out in 1HFY23. We have
seen trends of recovery in trading volume – both in cash and
equities segments. We highlight the same in the exhibits below.
Exhibit 11: Cash ADTO witnessing recovery Exhibit 12: Derivative ADTO growth consistent as
towards the end of 1HFY23 low impact from volatile market conditions
800 200,000
722 733 Derivative ADTO
153,506
Cash ADTO 669
144,835
660
143,874
636
619
600 150,000
112,195
104,247
111,726
524
105,972
475 498
Rs bn
391
Rs bn
400 100,000
71,021
27,256
13,959
200 50,000
0 0
Aug 22
May 22
Jun 22
Jul 22
Sep 22
Apr 22
FY20
FY21
FY22
Oct 22
Jun 22
Jul 22
Aug 22
May 22
Sep 22
Apr 22
FY20
FY21
FY22
Oct 22
Source: NSE, BSE, B&K Research
We also observe recovery in metrics like average daily traded

volume (ADTV), which has reverted towards 3.5 bn in the month of
September, from the lows of around 2.2 bn in the months of June and
July 2022. Additionally, average trade sizes (ATS) have also
recovered as we speak.
Exhibit 13: ADTV recovering from the down trend Exhibit 14: ATS across exchanges was not
at the start of 1HFY23 impacted significantly
Average Daily Trading Volume 35,000

4,000
30,000
33,237
3,500
29,770
29,737
29,526
29,483
25,000
29,039
28,604
28,516
28,059
27,860
27,249
3,000
26,347
25,586
20,000
2,500
Rs
15,000
mn
2,000
10,000
24,659
20,350
25,475
1,500
18,495
16,836
18,999
15,443
16,424
30,201
19,367
13,704
13,759
11,793
5,000
1,000
2,688
3,404
3,505
3,354
2,692
2,209
3,607
3,723
0
1,343
2,194
2,125
1,847
1,721
500
May 22
Jun 22
Jul 22
Aug 22
Sep 22
Apr 22
FY20
FY21
FY22
Oct 22
FY17
FY18
FY19
0
Oct-22
Jul-22
Aug-22
May-22
Jun-22
Sep-22
FY20
FY21
FY22
Apr-22
FY17
FY18
FY19
ATS - BSE ATS - NSE
7
Thematic Report
Participation in equity markets remain shallow in India
Compared to global levels, India’s participation in stock markets

remains low – around 2.6% of population if we consider the active
investors. Data from other countries points towards a large
headroom even though total number of participants (based on total
demat) is around 7.5% of the population.
Exhibit 15: India has a huge headroom for growth with only 2.6% of population as active investors
Investors/ Total Population

India - Active 2.6
India - Total 7.5
China 14.8
USA 58.0
0 10 20 30 40 50 60
%
Source: Media Reports, CDSL, NSDL, NSE, B&K Research
We believe that this itself points out the growth that the sector can
clock going ahead. As shown in exhibits 16-17, we expect steady-
state growth rates in turnovers in the market going ahead, subject
to normalised market conditions.
Exhibit 16: Cash turnover growth likely to Exhibit 17: Derivative ADTO likely to continue
continue FY24 onwards steady growth over FY23-25
275,000 200,000
225,000 150,000
Rs bn
Rs bn
175,000 100,000
125,000 50,000
75,000 0
FY20 FY21 FY22 FY23E FY24E FY25E FY20 FY21 FY22 FY23E FY24E FY25E
Cash Turnover (Rs bn) Derivative ADTO (Rs bn)
8
Thematic Report
Discount brokers have capitalised well in terms of

augmenting client base in the bull run
Dream run for the discount brokers
FY21-22 has been a dream run for discount brokers as they

cemented their dominance in the broking space through rapid
customer acquisition. While for the industry, the total number of
active clients went up by 3.3x during this period (from 10.8 mn active
clients in FY20 to 36.0 mn in FY22), the growth statistics were
significantly lopsided in favour of discount brokers.
For example, Zerodha which already had a 13% market share before
this bull-run started, saw active client base multiply by 4.4x in this
period. Next in line were players like Upstox (8.4x) and Angel One
(6.3x). New player Groww had multiplied its client base by almost 5x
between FY21 and FY22 alone. This is shown in the exhibits below.
Exhibit 18: Zerodha Active clients multiply by ~6x Exhibit 19: Upstox active clients witness strong
from FY20 levels growth from FY20 levels
8.0 7.0
Zerodha Active clients 6.7 6.6 Upstox Active clients 5.8 5.6
6.4 6.5 6.6 6.6 6.6 6.0 5.5
6.3 5.2 5.2 5.0
6.0 4.7
5.0 4.4
4.0
4.0 3.6
mn
mn
3.0
2.1
1.4 2.0
2.0
0.9 0.6
0.5 1.0
0.0 0.1
0.0 0.0
Jul 22
Aug 22
May 22
Jun 22
Sep 22
Apr 22
FY20
FY21
FY22
Oct 22
FY18
FY19
Jul 22
Aug 22
May 22
Jun 22
Sep 22
Apr 22
FY20
FY21
FY22
Oct 22
FY18
FY19
Exhibit 20: Groww active clients multiply by ~5x Exhibit 21: Angel One active clients witnessing
over FY21 levels consistent growth after strong FY21 and FY22
6.0 5.0
Groww Active clients 5.0 Angel One Active clients 4.2 4.2
4.7 4.9 3.9 4.0 4.1 4.1
5.0
4.3 4.4 4.5 4.0 3.7 3.8
4.1
3.8
4.0
3.0
3.0
mn
mn
2.0 1.6
2.0
0.8 1.0 0.6
1.0 0.4
0.0 0.0
May 22
Jun 22
Jul 22
Aug 22
Sep 22
Apr 22
FY20
FY21
FY22
Oct 22
FY19
Aug 22
May 22
Jun 22
Jul 22
Sep 22
Apr 22
FY21
FY22
Oct 22
9
Thematic Report
Revenue model of discount brokers insulate from cyclicality
Discount brokers have a perceived advantage over traditional

brokers in the sense that their pricing model is based on number of
orders as opposed to ad valorem of the traditional brokers. On the
other hand, they have built a revenue model around charges. The
lower rates played a key role in attracting customers to their
platform, in our view. Below we compare the rates of various brokers.
Exhibit 22: Lower brokerage charged by discount brokers attracted customers to their platform
ICICI Direct 5Paisa Upstox Groww
Type of ICICI I- Prepaid ICICIDirect Prime Basic Power Ultra

Zerodha Angel One
trade Neo Secure Brokerage Investor Trader
Plan Plan (Lifetime) (Rs 499/ (Rs 999/
month) month)
Rs 2,500 - 0.25% Rs 299 (Annual) - 0.27%
2.5% or Rs 0.05% or Rs
Rs 5,000 - 0.22% Rs 999 (Lifetime) - 0.22%
20/executed 20/executed
Equity Rs 12,500 - 0.18% Rs 1,999 (Lifetime) - 0.18% Rs 20/ Rs 10/
Zero Zero Zero 0.55% Zero order order
Delivery Rs 25,000 - 0.15% Rs 2,999 (Lifetime) - 0.15% order order
whichever is whichever is
Rs 50,000 - 0.12% Rs 3,999 (Lifetime) - 0.12%
lower lower
Rs 1,00,000 - 0.07% Rs 4,999 (Lifetime) - 0.1%
Rs 2,500 - 0.25% Rs 299 (Annual) - 0.27%

0.03% or Rs 0.25% or Rs 0.05% or Rs 0.05% or Rs
Rs 5,000 - 0.22% Rs 999 (Lifetime) - 0.22%
20/executed 20/executed 20/executed 20/executed
Equity Rs 20/ Rs 12,500 - 0.18% Rs 1,999 (Lifetime) - 0.18% Rs 20/ Rs 10/ Rs 10/
order order 0.28% order order
Intraday order Rs 25,000 - 0.15% Rs 2,999 (Lifetime) - 0.15% order order order
whichever is whichever is whichever is whichever is
Rs 50,000 - 0.12% Rs 3,999 (Lifetime) - 0.12%
lower lower lower lower
Rs 1,00,000 - 0.07% Rs 4,999 (Lifetime) - 0.1%
Rs 2,500 - 0.025% Rs 299 (Annual) - 0.027%

0.03% or Rs 0.25% or Rs 0.05% or Rs
Rs 5,000 - 0.022% Rs 999 (Lifetime) - 0.022%
20/executed 20/executed 20/executed
Equity Rs 12,500 - 0.018% Rs 1,999 (Lifetime) - 0.018% Rs 20/ Rs 10/ Rs 10/
order order Zero 0.05% order Rs 20/ order
Futures Rs 25,000 - 0.015% Rs 2,999 (Lifetime) - 0.015% order order order
whichever is whichever is whichever is
Rs 50,000 - 0.012% Rs 3,999 (Lifetime) - 0.012%
lower lower lower
Rs 1,00,000 - 0.007% Rs 4,999 (Lifetime) - 0.01%
Rs 2,500 - Rs 35/ lot Rs 299 (Annual) - Rs 40/ lot
0.25% or Rs
Rs 5,000 - Rs 30/ lot Rs 999 (Lifetime) - Rs 35/ lot
Rs 20/executed
Equity Rs 20/ Rs 95/ Rs 12,500 - Rs 25/ lot Rs 1,999 (Lifetime) - Rs 25/ lot Rs 20/ Rs 2/ Rs 2/
20/executed order Rs 20/ order Rs 20/ order
Options order lot Rs 25,000 - Rs 20/ lot Rs 2,999 (Lifetime) - Rs 20/ lot order lot lot
order whichever is
Rs 50,000 - Rs 15/ lot Rs 3,999 (Lifetime) - Rs 15/ lot
lower
Rs 1,00,000 - Rs 7/ lot Rs 4,999 (Lifetime) - Rs 10/ lot
0.03% or Rs 0.25% or Rs 0.05% or Rs
Currency Rs 20/ Rs 20/ Rs 20/ Rs 10/ Rs 10/
order order Rs 20/ order Rs 20/ order order
Futures order order order order order
lower lower lower
0.03% or Rs 0.25% or Rs
Currency Rs 20/ Rs 20/ Rs 20/ Rs 10/ Rs 10/
order order Rs 20/ order Rs 20/ order Rs 20/ order
Options order order order order order
lower lower
NA
0.03% or Rs 0.25% or Rs 0.05% or Rs
Commodity Rs 20/ Rs 20/ Rs 20/ Rs 10/ Rs 10/
order order Rs 20/ order Rs 20/ order order
Futures order order order order order
lower lower lower
0.03% or Rs 0.25% or Rs
Commodity Rs 20/ Rs 20/ Rs 20/ Rs Rs 10/
order order Rs 20/ order Rs 20/ order Rs 20/ order
Options order order order 10/order order
lower lower
Source: Company websites, B&K Research
We observe that a per-order revenue model is less cyclical

compared to a volume-based model. For example, as we see in
Exhibits 23-24, even during periods of market downslide, the number
of trades in NSE has continued to increase steadily. Same has been
the case with demat account addition in India.
10
Thematic Report
Exhibit 23: Change in NSE total trades have increased consistently even during market downslide
100
80
60
40
%
20
0
(20)
(40)
(60)
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Nifty 50 % Change % Change in NSE Total trades
Source: Angel One Investor Presentation, B&K Research
Exhibit 24: Growth in incremental demat accounts aligned with market movement
250
200
150
100
%
50
0
(50)
(100)
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Nifty 50 % Change % change in incremental demat accounts
Source: Angel One Investor Presentation, B&K Research
Discount brokers became the consequent market leaders
As a result of aggressive growth and focus on client additions,

discount brokers became the market leaders in terms of client base
with Zerodha (17.4%), Upstox (14.5%), Groww (10.7%) and Angel (10.1%) in
FY22. In YTDFY23, the shares have moved slightly in favour of Zerodha,
Groww and Angel One as we show in Exhibits below. ICICI Securities
(ISEC) was the only traditional broker in the top-5 list with 8.4%
market share.
In Exhibit 25, we show that the rise of discount broking has led to the
segment acquire almost 60% market share of active clients. This is
largely driven by 5 discount brokers in the top-10 list (Zerodha,
Upstox, Groww, Angel and 5 paisa), while 5 traditional brokers (ISEC,
HDFC Securities, Kotak Securities, IIFL Securities and Motilal Oswal
Financial Services) have lost share over the last 10 years (from 32% in
FY14 to 19% currently).
11
Thematic Report
Exhibit 25: Share of top-10 brokers have increased due to increase in discount broking
100
NSE actives market share
80
60
%
40
20
0
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 YTDFY23
Top 10 brokers Discount brokers in top 10 (5 players) Traditional in top 10 (5 players)
Exhibit 26: Market share gains of 4 out of top-5 brokers highlight discount broking dominance
25
20
15
%
10
(5)
Zerodha Groww Upstox Angel ISEC
Exhibit 27: Market share gains of top-10 brokers have stabilised
100%
80%
60%
%
40%
20%
0%
Zerodha Groww Upstox Angel ISEC Players 6-10 Rest
12
Thematic Report
Global trends in user engagement
We see similar trends from disclosures of Robinhood Markets – an

online discount broker in the US. Monthly active users (MAU), which
saw a constant decline from peak in 2QCY22 seems to have
bottomed out and saw slight increase in October 2022. We outline
the data below.
Exhibit 28: Robinhood’s MAUs saw slight increase in October 2022

25
Robinhood - Monthly Active Users (mn)
20
15
mn
10
0
3QCY20 3QCY20 1QCY21 2QCY22 3QCY21 4QCY21 1QCY22 2QCY22 3QCY22 4QCY22 -
YTD
Source: Robinhood company website, B&K Research
13
Thematic Report
Retail broking has become significantly fintech
Access to smartphone, availability of data at a reasonable rate and

digitisation of the financial system (events like Aadhaar-based KYC
enabling seamless and fast account opening, and UPI for fund
transfer) has given a significant fillip to the whole process – from
customer acquisition to activation to monetisation.
Exhibit 29: India likely to have ~1 bn internet users by FY26
18% CAGR
Active 900
internet users 400
10% CAGR
FY26E
Smartphone 800
FY21
users 500
8% CAGR
Population
950
with access
658
to internet Chart Title
0 100 200 300 400 500 600 700 800 900 1000
mn
Source: Paytm RHP, B&K Research
Exhibit 30: Evolution of fintech with reduced data costs and launch of UPI
Source: Paytm RHP, B&K Research
14
Thematic Report
Additionally, these companies have started focusing on providing

tools and platforms to customers which would be suitable for
trading in a DIY manner. These include interactive tools for new-to-
market customers and advanced tools for sophisticated products.
Below we highlight the various tools few of the brokers offer to their
customers.
Exhibit 31: Various products and tools offered by top brokers
Products/ Zerodha Upstox Groww Angel ICICI 5Paisa HDFC Kotak

Features One Securities Securities Securities
Mobile trading
       
application
Web trading
       
platform
Mutual fund
       
platform
Insurance
    
platform
Developer APIs      
Investor education
       
platform
Research reports/
    
Advisory tips
Nudge/Alerts        
Margin Funding      
Margin against
      
share
GTT (Good till
 
trigged) order
T+5
Fund settlement T+2 T+2 T+2 T+2 T+2 T+2 T+2
minutes*
Source: Company Websites, B&K Research. *Subject to daily limit in certain product categories.
Few players are also building Super-App where they can integrate
customer journeys across segment – be it trading or buying
products like mutual fund, insurance and loans. In the listed space
both Angel One and ICICI Securities have brought in such apps.
15
Thematic Report
Exhibit 32: Management commentaries on Super-App
Particulars Angel One ICICI Securities

Strategy Investing heavily in introducing multiple journeys in the
future to provide an expanded investment horizon to its
cohort of young customers.
Launch First phase launched on iOS and the web platform. The Soft launch of Super-App done during
company successfully demonstrated largest migration to 2QFY23.
the new application without operating 2 parallel versions of
the app. Android version has also been launched for limited
users with multiple new journeys in the pipeline.
Features Integration of equities has been done which will be followed The application integrates all product
by mutual funds to observe cross-selling across these asset offerings i.e. equities, F&O, currency,
classes. Gradually, other journeys i.e. asset classes like commodities, mutual fund, insurance and
insurance, loans, etc. will be launched and integrated in the global investments. The company is
app directly. planning to integrate loans product shortly.
Source: Company, B&K Research
Pace of client additions may get rationalised due to cost

deferment in the face of market volatility and lower private
funding
Client acquisitions come at a cost, which can at times be significant,

and can go upwards of Rs 1,000 per customer. Acquisition costs
include digital marketing expenditure, referrals (which are variable
in nature) and ATL or brand building exercise. In terms of marketing
expenses, we have also seen big ticket spends in this space (e.g.
Upstox’s IPL deal for two years for Rs 900 mn).
We believe that market volatility and dry-up in private capital can

impact the client acquisition rates in broking industry. We observe
that even listed players have become judicious in their expenditure
during this period.
Exhibit 33: Planning costs to avoid missing out on growth opportunities – 2QFY23 commentary
ICICI Securities Angel One
• Company is focused on cost efficiencies without • Company has witnessed some softening of costs towards
compromising on growth opportunities. acquiring clients in Q2 of FY'23. This is likely to normalize
• For Q2FY23, cost increased by 8% sequentially and further into future quarters.
20% YoY, due to investment in talent and technology, • On a broader level, company wants to maintain the OPM
and in line with broad guidance, cost to income ratio of 45% to 50%.
has been flat. • Management is of the view that in future, as industry
• Going forward, company continue to look at costs in expands and new entrants comes, average revenue at
a judicious manner, so that it does not miss out on industry level would come down and eventually operating
any growth opportunities and franchise enhancing costs for company as company starts to offer products at
opportunities and at the same time keeping in mind planet-scale.
the impact on P&L. • Investment in development of Super App and adding
required IT infra led to increase in Fixed Asset by Rs 540 mn
to Rs 2.2 bn.
16
Thematic Report
On the other hand, we believe monetisation of client vintage is what

many players are trying at this stage. In case of listed players, we
believe ISEC has already gained some traction in this are with 60-
65% revenue coming from more than five years vintage customers.
In comparison, for Angel, bulk of the revenue comes from less than
2-year-old customers.
Exhibit 34: Angel One’s mix is skewed towards Exhibit 35: ISEC’s customer mix beneficial for
new-to-market clients monetisation of clients
8% ISEC- VIntage wise revenue mix

Angel - Vintage wise revenue mix
23%
<2 years 35
<5 years
2-5 years
> 5 years
>5 years
65
69%
Additionally, this has led to a race towards providing third party

investment products to customers for a stickier commission
income.
Exhibit 36: Traditional brokers have a better share of revenue compared to discount brokers
50,000
Broking revenue
40,000
30,000
mn
20,000
10,000
0
Zerodha Kotak Sec** MOFSL* Angel ISEC HDFCSec* Upstox*** IIFLSec Groww 5paisa
Source: Companies, B&K Research. *MOFSL, HDFCSec broking revenue includes both retail and institutional; **Kotak Sec
data is for total revenue. ***Upstox revenue pertains to FY21 and for others it is FY22.
17
Thematic Report
Exhibit 37: Traditional brokers with diverse Exhibit 38: PE backed new-age brokers unable to
revenue streams generating high profits generate profits yet
16,000 20,000
PAT - traditional brokers PAT - new-age brokers
14,000
15,000
12,000
Rs mn
10,000
Rs mn
10,000
8,000
6,000 5,000
18,000
6,249
137
68
4,000
0
13,826
9,843
3,058
10,013
(717)
2,000
13,110
0 (5,000)
MOFSL IIFLSec HDFCSec Kotak Sec ISEC 5paisa Zerodha Groww Upstox* Angel
Source: Companies, NSE, B&K Research. Note:* Upstox PAT pertains to FY21 and for others it is FY22.
Exhibit 39: Discount brokers with new-to-market clients have lower revenue/ active client
25,000
Broking Revenue per active client
20,000
15,000
10,000
5,000
17,647
6,850
4,303
19,918
3,625
10,124
4,513
904
823
679
0
5paisa MOFSL* IIFLSec HDFCSec* Zerodha Groww Upstox Kotak Sec** Angel ISEC
Source: Companies, B&K Research. *MOFSL, HDFCSec broking revenue includes both retail and institutional; **Kotak Sec
data is for total revenue. ***Upstox revenue pertains to FY21 and for others it is FY22.
Private market deals have happened at significantly higher

valuation levels than in public markets
Upstox and Groww has seen significant valuation expansion post

their recent fund raises. We have provided details and the
comparison of the same in below tables.
Exhibit 40: Recent fund raises by PE backed stockbrokers
Valuation Fund raise

Company Date Investor
(US$ bn) (US$ mn)
Aug-22 6.3 Blacksoil Capital and Xceed Investments LLC

Upstox 3
Nov-21 25 Tiger Global
Oct-21 251 ICONIQ Growth, Alkeon, Lone Pine Capital, Steadfast

Groww 3
Apr-21 83 Tiger Global, Sequoia, Ribbit Capital, YC Continuity, Propel Venture
Source: Media Reports, B&K Research
18
Thematic Report
Exhibit 41: PE backed brokers’ valuations are significantly stretched
Zerodha Upstox Groww Angel One ISEC
Valuation (Rs bn) 160 240 240 123 171
Revenue – FY22 (Rs mn) 43,000 4,291* 3,480 22,586 26,546**
Active clients (mn) – October 2022 6.63 4.42 4.98 4.22 2.91
Value/Revenue (x) 3.7 55.9 69.0 5.4 6.4
Value/Active clients (Rs '000) 24,133 54,299 48,193 29,147 58,763
Source: Company, B&K Research. * FY21 revenue. **Broking revenue. Note: Valuation for Zerodha is taken from media sources
(undertaken for ESOP buyback exercise). Valuation for Upstox and Groww are from recent fund raises while that for listed
players are their respective market caps.
19
Thematic Report
Diversifying towards wealth management

Tapping the customer base
Many brokers currently are diversifying their offerings to customers

towards third party products, thereby further monetising their
customer base. We expect that as this segment grows, it will to some
extent insulate the brokers’ overall revenue growth from cyclicality
of the capital market.
Exhibit 42: Brokers looking to diversify from cyclical revenue streams
Product category Zerodha Upstox Groww Angel One ICICI Securities

Equity     
Commodity    
Currency    
Futures     
Options     
Mutual Fund     
Insurance  
Loans 
Gold 
Fixed Deposit 
Source: Companies, B&K Research
Exhibit 43: ISEC’s revenues are well diversified with significant share of distribution revenue
25
Distribution revenue as a % of revenue
20
15
%
23.8
23.3
10
18.9
18.8
19.1
18.1
17.4
17.4
17.1
15.9
14.3
14.3
5
2.0
2.0
2.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
1.0
0 1.0
3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23
Angel One ICICI Securities
We observe that ISEC has already made significant progress in this

area given its vintage customer base and mix of customers
(distribution revenue at 18-19% of top-line currently). On the other
hand, the segment remains small for Angel (around 1.5% of top-line),
although this remains a clear focus area for the Company.
20
Thematic Report
Investing in technology and tech employees

Share of online trading has gone up with access to internet and
smartphone
Digitisation has been a theme in the financial sector and has been
a key enabler for the broking industry in the last few years. The
advantages have panned out from diverse parts of the value chain
like:
a) Ease of account opening digitally.
b) Internet-based trading.
Top brokers have turned into product-based fintech companies
Owing to increasing penetration of internet-based trading, brokers

are focusing on providing products with features that help
customers in their trading journey. While super-app remains a
consistent theme.
Some key highlights from the listed players are as follows:
Exhibit 44: Product related comments of listed players
Company Comments on key products/features
• Rolled out Super-App on iOS and web platform to a limited set of clients.
• The product will be progressively offered to entire iOS population.
• Industry high SAL of 99.995%.
Angel • Focusing on scaling up organic traffic and have revamped website with this purpose. The
optimised site has led to 11% increase in page load speed and made the portfolio feature 7x
efficient.
• First entrant in terms of providing options on commodity market on mobile, mobile platform and
web platform.
• Undertook soft launch of Super-App which integrates all product offerings, with loans to be
offered shortly.
• Launched product for derivative traders – Flash Trade.
ISEC • Launched open API architecture called Breeze API.
• Other products launched – Integrated watchlist, Smart Order tool, touch simplified options
trading product.
• Product in pipeline – trading platform for high-volume trade – Meta Cockpit.
Technology related capex expected to remain elevated – at least

in the near-term
Because of the focus on the product side, the technology cost

increased significantly for key players. While spend on the capex
side may continue, there may be some deferment in cases (as in
ISEC) given the market cycle.
21
Thematic Report
Exhibit 45: Comments on technology spends
Company Comments on technology spend
• Next five years will see an aggressive investment phase for Angel.
• Angel will continue to build multiple products and portfolio.
Angel • Current investments involve development of Super-App, augmentation of IT infra (data in DR site)
which led to fixed assets increase to Rs 540 mn.
• Management plans to operate in an operating margin range of 45-50%.
• Technology costs had increased by 70% in FY22 compared to the previous year.
• Management earlier had budgeted 2.5x of FY22 costs for FY23. However, they have now deferred
ISEC
it from 4 quarters to 6-7 quarters.
• The Company aspires to have a 40% Cost-to-Income ratio by FY25.
Tech-experts have been instrumental in industry growth
With focus in product development, the industry has relied

significantly on hiring individuals from the big-tech and fintech
industries. Most companies are either founded by technocrats or are
being led by the same in key executive positions. We highlight few of
the profiles in Exhibit 47. While this has elevated the employee benefits
expenditure for the top players in the last few years (Exhibit 46), we
believe that we are at the last phase of the hiring cycle and that
current market conditions will result in streamlining of some costs.
Exhibit 46: Employee expenses on the rise across industry due to need of tech experts
10,000
Employee benefit expenses (Rs mn)
8,000
6,000
Rs mn
4,000
2,000
0
5paisa MOFSL IIFLSec HDFCSec Zerodha Groww Upstox Kotak Sec Angel ISEC
FY18 FY19 FY20 FY21 FY22
Exhibit 47: Leaders in brokers having Big-tech/Fintech background
Company Key Management Designation Past experience in tech
Narayan Gangadhar CEO Google, Microsoft, Amazon, Uber, Ola

Angel
Jyotiswarup Raiturkar CTO Walmart Labs, Intuit, Goibibo, Samsung Research, Microsoft
ISEC Subhash Kelkar CTO CTO for IIFL Group
Lalit Kesre Co-founder & CEO Flipkart
Groww Harsh Jain Co-founder & COO Flipkart
Neeraj Singh Co-founder & CTO Flipkart

22
Thematic Report
Exhibit 48: Snapshot of key brokers in the industry
Broker name Company snapshot

• Transformation from traditional broker to digital broker in FY18 to harness growth and become one of the
leading brokers of the country.
Angel One • Angel’s client base grew by 8.3x between 1QFY20 and 2QFY23, from 1.4 mn to 11.6 mn with highest
contribution from Tier-3 towns. Market share, with respect to NSE Active clients, went up from 4.4% in FY18
to 11.2% at the end of 2QFY23.
• Subsidiary of ICICI Bank Ltd., ISEC is undergoing transition from a traditional broker to a virtual financial
supermarket with diversified business lines including broking, distribution, wealth management and
investment banking.
ICICI Securities • 60-65% of customer base are vintage cash equites focused while 80%+ of incremental customer base are
new-to-market clients.
• Market share, with respect to NSE Active clients, has been stable at 8.3-8.5% resulting in ISEC being 5th
largest player in the industry.
• India’s largest broker in terms of active clients, offering discount brokerage services through its advanced
tools and platforms.
• Active client base witnessed humongous growth from 0.12 mn clients in FY17 to 6.7 mn currently, with a
Zerodha market share of 18%. Zerodha benefited through early mover advantage in discount broking and caters to
10 mn+ customers.
• Currently, the company offers direct mutual funds to clients and is awaiting final approval from SEBI to
set-up an AMC.
• Backed by prominent investors including Ratan Tata and Tiger Global, Upstox is a tech-first low-cost
broking firm providing trading services at discounted prices.
Upstox • The customer base increased by 1.4x YoY in FY22 and the company recently crossed 10 mn users with 70%
of customers being first-time investors. Upstox is the 3rd largest player with an active client base of 4.4
mn.
• Backed by investors including Tiger Global, Sequoia and Satya Nadella, Groww started as a digital mutual
fund distribution platform and soon moved into discount broking model.
• The company ranks 2nd with respect to NSE Active clients, with 14% market share and shown aggressive
Groww
growth of 4x YoY in the client base.
• Acquisition of Indiabulls AMC in FY22 will help the company to move into the mutual fund segment in
future.
• Discount broker which started operations in 2016 and was listed on the stock exchange post demerger
from IIFL Holdings in FY17.
5Paisa Capital
• 6th largest broker (as per active client base), having market share of 4% with increasing client base on the
back of diversified revenue streams and focus on product enhancement.
• Broking arm of IIFL Group, IIFL Securities is a traditional broker which offers retail broking, mutual funds,
insurance, institutional broking, and investment banking services.
IIFL Securities
• IIFL’s market share with respect to active clients stands at 3% with customer acquisitions flattening, in line
with market trends.
• One of the leading brokers of India, with a customer base of 3.83 mn, to which it offers extensive services
like investments & direct trading, mutual funds, fixed deposits, basket investing, global investing, PMS/AIF,
HDFC Securities etc.
• With an active client base of 1.16 mn, it is the third largest traditional broker. Its active client base has
grown by 17% CAGR over FY18-22 as it continues to witness consistent growth.
• Diversified financial service provider with presence in 550 cities and 3.2 mn registered customers
Motilal Oswal including retail, HNIs, mutual funds, foreign institutional investors and corporate clients.
Financial Services • Active clients at 0.9 mn witnessed growth of 26%. ARPU has been consistent in the range of Rs 26,000-
28,000.
We have provided detailed profiles of the brokers not under our

coverage in the Annexure.
23
Thematic Report
Key regulations that impacted broking industry
Broking being a highly regulated business, has seen its fair share of
impacts from regulatory changes. We highlight the key regulations
that have come in effect in the last few years in Exhibit 49.
Exhibit 49: Recent key regulations in the Broking industry
Date Regulation Regulation details
Depositories have to validate the transfer instruction received through any

September Validation of securities for
channel using the block mechanism before the actual transfer of pay-in from
2022 pay-in of securities
the client’s demat account to the trade member’s pool account.
Block mechanism for early Shares of client intending to make a sale transaction will be mandatorily
August 2022
pay-in transactions blocked in the client’s demat account in favour of the clearing corporation.
Settlement of running Settlement of running accounts of funds of the client has to be done by the
July 2022 account of client’s funds broker after considering the end of day obligation of funds as on the date of
lying with trading member settlement across all exchanges on first Friday of the quarter for all clients
Stock exchanges to accept the ASBA applications in their electronic book

Processing of ASBA
May 2022 building platforms only with a mandatory confirmation on the application
Applications
monies blocked.
Stock exchanges/clearing corporations had mandated brokers to collect

Upfront collection of applicable margins from their client on an upfront basis and minimum 4
margins from clients in snapshots of client wise margin requirement was required to be sent in a day
May 2022
cash and derivatives (20 July 2020 circular). Now, margins have to be collected as per fixed Beginning
segments of day margin parameters and broker has to ensure that applicable margin at
the end of the day is collected.
All individual investors applying in public issues where applications is up to Rs 5

April 2022 Revision of UPI limits
lakhs shall use UPI and provide their UPI ID in bid-cum-application form.
Clients shall explicitly agree to authorize the stockbroker and DP to access their
Demat Debit and Pledge
April 2022 BO account for the limited purpose of meeting pay-in obligations for settlement
Instruction
of trades executed by them.
Broker should accept collateral from clients in the form of securities, only by
February Margin obligations to be
way of margin pledge created in the depository system. Transfer of securities to
2020 given by way of pledge
the demat account of stockbroker for margin purposes shall be prohibited.
SEBI is considering creation of an ASBA-like system for the stock market. Similar
to the IPO market, client’s bank will get the authorisation to block the amount till
Possible ASBA-like payment
settlement of the transaction is complete. This will allow investors to earn
upcoming infrastructure for
interest on the blocked amount for any purchase made by them in the stock
regulation secondary market
market till transaction settlement and will also avoid T+1/ T+2 settlement by
stock brokers.
Source: SEBI, B&K Research
24
Thematic Report
Thoughts on valuation of stockbrokers

Stockbrokers historically trade at lower range than other capital
market plays due to earnings volatility
As we show in Exhibit 50, stockbrokers have historically had a trading

multiple range which is at a discount to other capital market
participants – like AMCs (including ecosystem plays), depositories,
wealth managers, and exchanges.
The primary reason for the same is the cyclicality in earnings due to
strong sensitivity towards market cycles. We highlight the same in
below Exhibits.
Exhibit 50: Brokers trade at significant discount to other capital market plays
100
TTM P/E multiple ranges - last 10 years (x)
80
60
x
40
20
0
Asset managers Stockbrokers Wealth managers RTAs/distributors Exchanges Depositories
Source: Companies, B&K Research. Note: We have taken 12-month trailing PE ratios for this chart. Companies in the
comparison include HDFC AMC, ABSL AMC, NAM India, UTI AMC, Angel One, ICICI Securities, MOFSL, IIFL Securities, IIFL Wealth,
Anand Rathi Wealth, CAMS, Prudent Corporate Advisory, BSE, MCX, CDSL. Data is for last 10 years/since listing.
Expect multiples to expand as business model journeys from

pure-play broking to wealth managers
We argue that the valuation range should expand going forwards as

brokers neutralise the sensitivity to an extent, through diversification.
We expect to see this play out over the next three-five years as the
transformation takes place.
In this note, we have valued the players using our DCF based
valuation models as we highlight in individual company sections.
25
Thematic Report
Catalysts and Risks for broking businesses
Catalysts:
• Resurgence in market sentiments: A bull-market conditions

could significantly impact the revenue stream positively.
• Acceleration of digital culture: As digital culture accelerates in

the financial space, we could see not only higher levels of online
trading but offtake of other investment assets through the
Super-apps – like mutual funds, insurance, loans and other
investment products (like smallcase).
Risks:
• Regulatory: Any change in regulations may impact the revenue

pool of broking business. We have seen similar instances in
terms of peak margin guidelines in the recent past. Possibility of
introduction of ASBA methodology for secondary market
transactions could impact float income of brokers.
• Market cycles: While brokers’ revenue will get increasingly de-

coupled from capital market performance, the broking revenue
is still a sizeable portion of the revenue mix.
• Competitive pressure: As more and more traditional brokers

start adopting discount broking model (recent newsflow
suggest HDFC Securities entering the segment, Source: The
Economic Times) competitive pressures could increase and
impact the incumbents (including further dilution of pricing
models and more aggressive acquisitions strategies).
26
Thematic Report
Depositories – unique play on capital market activity

A macro play on capital markets
One of the segments that have benefitted the most in the last five
years from heightened capital market activity is the depository
segment. A depository’s core revenue model has income sources
from:
a) Cash market activity.
b) IPOs and corporate action.
c) Issuances of other securities in dematerialised form.
The last two bull-market and large number of IPOs have helped this
industry revenue grow strongly (at 27% CAGR over FY17-22) to Rs 13.1
bn. The revenue for 1HFY23 was at Rs 7.5 bn. In terms of the topline,
NSDL’s market share is around 60%, while that of CDSL is around 40%.
We highlight the same in Exhibit 52.
Exhibit 51: Industry witnessed strong revenue growth in FY21 and FY22
15,000 80
Depository industry size and growth
60
10,000
Rs mn
40
%
5,000
20
3,070 3,976 4,543 4,861 5,511 8,095 13,124

0 0
FY16 FY17 FY18 FY19 FY20 FY21 FY22
Market Size Growth
Exhibit 52: NSDL maintains higher market share in terms of revenue
Market Share – Revenue

100
80
60.1 63.4 58.0 60.0 59.2 57.5 58.0
60
%
40
20 39.9 36.6 42.0 40.0 40.8 42.5 42.0
0
CDSL NSDL
27
Thematic Report
CDSL is well connected with discount brokers, leading to strong

growth in demat accounts over the last two years
However, in terms of number of Depository Participants, or Demat

accounts, CDSL remains the market leader. CDSL has 70% share in
terms of total number of demat accounts (72% at end of October
2022). In terms of incremental market share, CDSL has 82% market
share in October. CDSL added ~30 mn accounts in FY22, while NSDL
added only 5 mn accounts.
This strong growth of CDSL has been due to its long-standing

relationship with DP entities of discount brokers – like Zerodha, Angel
and Groww. CDSL has 581 depository participants at the end-
October 2022 versus 279 of NSDL.
Exhibit 53: CDSL dominates the market in terms Exhibit 54: Discount brokers popularity resulting
of number of demat accounts in increase in incremental market share of CDSL
Market Share - Demat Accounts Market share - Incremental demat accounts

100 100
29.8 80
80 39.4
53.6 51.5 48.2
57.5 55.9 60.0 62.5 65.0
60 60 76.0
85.9 85.5
%
%
40 40
70.2
60.6
46.4 48.5 51.8
20 42.5 44.1 20 40.0 37.5 35.0
24.0
14.1 14.5
0 0
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY17 FY18 FY19 FY20 FY21 FY22
CDSL NSDL CDSL NSDL
Exhibit 55: CDSL dominates in terms of number Exhibit 56: NSDL has higher number of issuers in
of DPs its portfolio
50,000
800
Number of issuers
Number of DPs
583 588 593 597 599 592 584 40,000
600
30,000
400
270 264 276 277 279 276 277
20,000
200
10,000
39,494
30,335
34,225
25,233
37,478
16,464
19,865
19,406
0
15,638
18,268
10,628
17,835
14,762
12,757
9,887
10,021

0
CDSL NSDL
FY16 FY17 FY18 FY19 FY20 FY21 FY22 1HFY23
28
Thematic Report
Exhibit 57: Most of the discount brokers have CDSL as exclusive depository
Broker Name CDSL NSDL
Zerodha 
Upstox  
Groww 
Angel One 
ICICI Securities  
5Paisa 
HDFC Securities  
Kotak Securities  
IIFL Securities  
Motilal Oswal  
29
Thematic Report
Regulatory impetus leads to option value

Insurance repository – On its way to be finalised
Insurance regulator IRDAI had long on its agenda the

dematerialisation of insurance policies. However, a recent draft
guideline highlights the focus on the same, with proposals to have
e-insurance policies issued for all new policies when the guidelines
come into effect along with a timeline of 12 months for existing
insurance policies.
Given that India has almost 450-500 mn in-force policies, we believe

this could be a significant opportunity for Insurance Repositories
(IRs).
Currently, India has four repositories:
• NSDL National Insurance Repository.
• CDSL Insurance Repository Limited (subsidiary of CDSL).
• Karvy Insurance Repository Limited.
• CAMS Insurance Repository Services Limited.
Bullion exchange at GIFT city/Spot Gold ecosystem in India
The bullion depository at GIFT city was earlier a fully owned

subsidiary of CDSL, is now owned by a consortium of BSE, NSE, MCX,
NSDL and CDSL. The infrastructure remains ready and the final date
of starting operations is awaited.
Additionally, SEBI has decided to develop spot gold ecosystem in

India and depositories have been working with SEBI to develop the
ecosystem for the same. The first trade done during Muhurat Trading
this year were settled through CDSL.
30
Thematic Report
Company section
31
Thematic Report
Initiating Coverage Angel One

BUY Transformation ongoing
Share Data Angel One’s (Angel) story so far has been one of the rapid and agile
Market Cap. Rs 131.6 bn (US$ 1,610 mn) transformation towards becoming a product-focused Fintech
Price Rs 1,577 player in the broking space. Angel gained market share with an agile
Target Price Rs 1,883
mindset harnessing the opportunity arising out of Tier-2/3 cities in
BSE Sensex 62,505
the post-Covid crash bull market. Evolved revenue model that
Reuters ANGO.BO
minimises impact of market cyclicality and upcoming diversification
Bloomberg ANGELONE IN
builds conviction on sustainability in revenue. We expect 21/23%
6M avg. daily turnover (US$ mn) 11.4
CAGR in Revenue/PAT over the next three years and initiate
52-week High/Low (Rs) 2,022/991
coverage with a Buy recommendation with a target price of Rs
Issued Shares 83 mn
1,883 valuing Angel at an implied multiple of 17x FY24E EPS based on
Valuation Ratios
our DCF model.
Year to 31 Mar FY23E FY24E FY25E
EPS (Rs) 92.2 114.2 139.2 From traditional broker to a Fintech player to a wealth manager
+/- (%) 22 24 22 Angel’s transformation story has been intriguing. After undergoing
PER (x) 17.1 13.8 11.3 the first transformation in FY18 from a traditional broker to a digital
PBV (x) 6.2 4.7 3.5
broker, Angel recorded strong growth and became one of the top-5
Dividend Yield (%) 1.9 1.9 1.9
brokers in the country alongside recording strong growth in client
Shareholding Pattern (%) base. Now, the company has started focusing on the wealth
Promoters 44 management segment for retail customers (through in-house
FIIs 11 products as well as third-party product distribution) and developed
MFs 8 a Super-App to activate customers in various journeys to that effect.
BFSI's 2
Angel is in investment mode while keeping profitability robust
Public & Others 35
Angel is currently in investment mode where the company expects
Relative performance
the same to continue for the next few quarters. However,
2,500
2,000 management remains confident of maintaining OPM in the range of
1,500 45-50%, while investments continue towards acquiring market share
1,000 or hi-tech capabilities. It is imperative to look at Angel as a product
500
company rather than a broker.
0
Oct-20
Jan-22
Oct-21
Nov-22
Mar-22
Mar-21
Aug-21
Jun-22
Aug-22
May-21
Dec-20
Revenue model insulates Angel from market cyclicality
Angel’s broking revenue model focuses on charging customers in

Angel one (Actual)
Sensex (Rebased) terms of number of trades. There have been only small periods where
Angel’s number of trades have de-grown over time thereby hardly
having any impact on Angel’s revenue development. We believe that
with further diversification towards distribution of third-party products
going ahead, sensitivity to market cyclicality will be minimal.
(Rs mn) FY22 FY23E FY24E FY25E

Revenue from Operations 22,586 28,460 33,727 39,984
PAT 6,249 7,640 9,461 11,531
Revenue per order (Rs)
F&O 26 25 25 25
Cash 16 14 14 14
Commodity 35 28 28 28
Return on equity (%) 46 41 39 35
32
Thematic Report
Rapid growth in client base

Angel has seen a phenomenal growth in its client base over the last
3.5 years. Angel’s client base moved up by 8.3x between 1QFY20 to
2QFY23 – from 1.4 mn to 11.6 mn (refer Exhibit 58). This was due to very
strong run-rate of client additions (refer Exhibit 59), which went up to
almost 1.5 mn client addition/quarter during the peak of the last bull
market, i.e. in 4QFY22. Recent market volatility has impacted the
pace of client additions to an extent, it was still healthy at 1.2 mn
additions in 2QFY23. Overall, the management has an objective of
growing faster than the industry, through product innovation and
technology as well as risk management and better operating
procedures.
Exhibit 58: Client base witnessed aggressive growth in the last two years
14
Overall client base
11.6
12
10.4
10 9.2
7.8
8
mn
6.5
6 5.3
4.1
4 3.2
2.7
2.2
1.5 1.6 1.8
2 1.4
0
1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23
Exhibit 59: Quarterly client additions strong; Exhibit 60: Tier-3 towns consistently
peak in 4QFY22 contributing highest to client additions
2,000 1,000
Gross Client Addition Gross Client Addition mix - Tier wise
800
1,500
600
in '000
in '000
1,000 400
200
500
1,468
1,204
0
1,257
1,337
1,277
1,178
550
956
347
231
141
511
2QFY22
2QFY23
2QFY21
1QFY23
1QFY21
1QFY22
3QFY22
3QFY21
4QFY22
4QFY21
0
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Tier 1 Tier 2 Tier 3
33
Thematic Report
Client activation impacted by market volatility

Angel has transformed itself into a digital player as it identified this
opportunity in 2015. As mindset of a traditional broker is different
from a digital broker, Angel decided to close all its physical offices in
2017-18 and focus on the digital piece. This catapulted Angel’s market
share among NSE active clients from 4.4% at the end of FY18 to 11.2%
at the end of 2QFY23. We highlight this in Exhibit 61. Angel’s active
client ratio was at 36.4% during 2QFY23 – a multi-quarter low,
impacted to an extent due to recent market volatility which caused
it to settle from a high of 40.2% in 4QFY22. Angel’s active client base
has grown by 4.2x over the last two years – from 1.0 mn in 2QFY21 to
4.2 mn in 2QFY23.
Exhibit 62: Active client ratio coming down from

Exhibit 61: Active client base growth normalising 4QFY22 peak
5 40 50
Active Client Ratio
4 37.7 39.2 40.2 39.4
30 40 36.0 36.4
34.3
30.5 32.1
3
20 30
mn
2
%
10 20
1
1.0 1.2 1.6 2.0 2.5 3.1 3.7 4.0 4.2
0 0 10
2QFY21
2QFY22
2QFY23
1QFY22
1QFY23
3QFY21
3QFY22
4QFY21
4QFY22
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
3QFY22
3QFY21
4QFY22
4QFY21
NSE Active Clients Base (mn)

Growth in NSE Active Client Base
We believe that this activation ratio should improve hereon if the

market conditions remain stable. Management focuses on having a
target activation rate of 50% in its overall wealth management
portfolio, which should be affected by offering a wide range of
products, features, and new capabilities to customers. The Super-
App that Angel is rolling out will play a critical role in achieving this
target.
34
Thematic Report
Focusing on Tier 2/3 cities aiding growth…

Angel’s focus on Tier 2/3 cities have helped the company to clock
such superior growth rates. Over the last 2.5 years, Angel has seen
share of customers from Tier 2 and 3 geographies grow from 89% of
the mix to 95% of the mix recently. Incidentally, while the market
volatilities have impacted run-rates and growth in all the three
geographical classifications (i.e. Tier 1, 2 and 3), the impact has been
minimal in Tier 3 and Tier 2 geographies. We highlight these trends in
Exhibit 65-66.
Exhibit 63: Client base growth starting to Exhibit 64: Gross client addition mix skewed
decline from high base of FY21 towards Tier 3 cities
35 100
30
80
25
28.1 29.3
20 22.7 60
22.2 22.6
%
15 20.0 %
18.5 17.9 40
10
12.5 13.0
11.3 20
5
7.1 6.7
0 0
2QFY20
2QFY21
2QFY22
2QFY23
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY21
3QFY22
4QFY21
4QFY22
2QFY21
2QFY22
2QFY23
1QFY21
1QFY22
1QFY23
3QFY21
3QFY22
4QFY21
4QFY22
Client base growth Tier 1 Tier 2 Tier 3
Exhibit 65: YoY growth on a declining trend Exhibit 66: Sequential de-growth in client
owing to high base additions
400 100
Tier wise client addition - YoY Growth Tier wise client addition - QoQ Growth
300
50
200
%
%
100 0
0
(50)
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
3QFY22
3QFY21
4QFY22
4QFY21
(100)
1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23
Tier 1 Tier 2 Tier 3 Tier 1 Tier 2 Tier 3
35
Thematic Report
…however, impacting ARPU

However, a changing mix has had consequences on the average
revenue per user (ARPU). The metric, as highlighted in Exhibit 67, has
fallen from Rs 761 per user in 1QFY20 to Rs 430 per user in 2QFY23.
Management has alluded to a higher share of new-to-market
clients in the mix which has resulted in this fall. In 2QFY23, the share
of such clients was at 88% of gross acquisition.
Exhibit 67: ARPU witnessing de-growth owing to higher share of new-to-market clients in client
addition mix
800 15
700
10
600
5
500
%
Rs
400 0
300
(5)
200
(10)
100
761 699 658 618 671 720 627 673 593 547 528 513 453 430
0 (15)
Quarterly Average Revenue Per Client Growth in ARPU
As per the management, ARPU on a cohort basis matures as the

clients progress into their second year and onwards in the wealth
creation journey. In the pre-digital model, ARPU used to be lower in
Year-2; however, the trends have changed in the new model.
Angel has not yet gone deep into the wallet share of the customers. As
the average age of customers is 28-29 years, they have a long runway
ahead. Generally, customers start with equity markets but gradually
move on towards mutual funds and insurance. The incremental cost of
such sales is minimal because of the digital nature, and through app it
is easier to nudge towards suitable products.
The share of net broking revenue from clients acquired in the last
two years is at 69% in 2QFY23, which has continuously trended down
since last one year (from 75%, a year back). Share of customers who
are there for more than five years (largely vintage customers) have
also started to come down (from 15% in 1QFY21 to 8% in 2QFY23).
On the other hand, the share of net broking revenue from customers
in the two–five years cohort has increased. We believe this reflects
the category maturing which is in line with management’s
commentary. In terms of sequential growth, this particular cohort
seems to be most immune, given the high teens growth in net
broking revenue clocked in the challenging 1QFY23. We highlight
these trends in Exhibit 70-71.
36
Thematic Report
Exhibit 68: New clients contributing maximum Exhibit 69: Contribution from 2–5-year-old
to net broking revenue clients increasing gradually
3,000 Client vintage wise revenue mix
Client vintage wise revenue 100
80
2,000
60
Rs mn
%
1,000 40
20
0 0
2QFY21
2QFY22
2QFY23
1QFY21
1QFY22
1QFY23
3QFY21
3QFY22
4QFY21
4QFY22
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
1QFY21
3QFY22
3QFY21
4QFY22
4QFY21
<2 years 2-5 years >5 years <2 years 2-5 years >5 years
Exhibit 70: 2-5 years age segment growing

rapidly YoY Exhibit 71: Sequential growth in all age segments
150 60
Vintage wise revenue YoY growth Vintage wise revenue QoQ growth
40
100
20
%
%
50 0
(20)
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
3QFY22
3QFY21
4QFY22
4QFY21
0
<2 years 2-5 years >5 years <2 years 2-5 years >5 years
Opportunity hence encompasses not only adding new customers

but also going deep into their wallet share. Management believes
that next five years will be an opportunity to increase customer
base, post which the second lever will kick-in and provide growth in
the subsequent years, which may last for 30 years or more.
37
Thematic Report
Digital business driving business growth

New customers are in the driving seat as far as revenue mix goes for
Angel. Share of direct clients in net broking revenue has moved up
to 76-77% mark in the last four quarters, compared to sub-70% share
two years back (i.e., in FY21 – refer Exhibit 73). This is because 92% of
gross client additions have happened in the flat fee segment in the
last six quarters, while that for the traditional plan has come down
to around 8% (refer Exhibit 75). Consequently, share of ADTO coming
from flat fee plan has inched up to 96% in 2QFY23 (from 73% in 1QFY21).
Net broking revenue from the flat fee plan has been showing
consistent growth and grew by 6.3x from 1QFY21 level in 2QFY23 to Rs
3,036 mn.
Exhibit 72: Contribution from direct clients at Exhibit 73: Focus on growing share of direct
almost ~5x of FY20 levels clients
3,000 Revenue mix - Client wise
Revenue - Client wise 100
80
2,000
60
Rs mn
%
842
765
730
658
40
592
1,000
494
527
392
401
307
274
2,486
2,484
251
2,087
2,738
1,528
1,294
1,720
20
449
902
709
937
481
0 0 2QFY21
2QFY22
2QFY23
3QFY20
1QFY21
1QFY22
1QFY23
4QFY20
3QFY21
3QFY22
4QFY21
4QFY22
2QFY22
2QFY23
2QFY21
3QFY20
1QFY21
1QFY22
1QFY23
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Direct Clients AP Clients Direct Clients AP Clients
Exhibit 74: ADTO contribution from flat fee Exhibit 75: 90%+ clients being added through flat
consistent at ~96% starting FY23 fee plan
ADTO mix - plan wise Gross client addition mix - plan wise
100 100
80 80
60 60
%
%
40 40
20 20
0 0
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
1QFY21
3QFY22
3QFY21
4QFY22
4QFY21
2QFY22
2QFY23
2QFY21
1QFY21
1QFY22
1QFY23
3QFY22
3QFY21
4QFY22
4QFY21
Flat fee Traditional Flat fee Traditional plan
38
Thematic Report
Exhibit 76: 1 mn+ clients being adder per quarter through flat fee plan; sequential de-growth for both
plans after 4QFY22 peak
1,500 1,351 100
Client addition and growth 1,231
1,181 1,152 80
1,125 1,082
60
1,000 855
40
in '000
%
496 20
458
500
312 0
100 80 96 107 117 105 96 (20)

35 54 53
0 (40)
1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23
Flat fee Traditional plan Flat fee QoQ Traditional plan QoQ
A product driven mindset
Gradually, Angel had moved to acquire customer digitally, where the

precedent norms resulted in outreach to urban and Tier 1 customers
while pockets of growth came from Tier 2/3 geographies.
Hence, the company’s focus shifted to digital and social media

avenues. Angel has been able to optimise its acquisition engine so
that it can acquire customers at a higher rate, and consequently
remain profitable.
The company is progressing through building AI/ML solutions based

on customer behavioral habits in the Super-App and using machine
learning for cross-sell of products. Customer segmentation via AI/ML
and integration with social media has helped Angel optimise
acquisition costs and customer lifecycle value.
Super-App is getting rolled out gradually
Product innovation remains the company’s primary focus. The

company currently has two products: Angel Broking Mobile App and
Angel BEE, and has launched a new product recently that will bring
all clients into a single Super-App.
The Super-App has been rolled-out on iOS and the web platform for
a limited set of clients and will be soon launched for all iOS
customers. The company will undertake migration to the new app
without operating 2 parallel versions of the app. Management
expects the app to take couple of quarters to mature. The plan is to
launch of broking journeys to be done in FY23 post which in FY24
Angel wants to activate the MF journeys.
Below exhibits highlight key products of Angel.
39
Thematic Report
Exhibit 77: Key products of Angel One
Angel One
Product features Product success
products
Play Store (Android)

• Provides personalised suggestions and stock ideas on the basis of a rule-
Rating – 4.1
based investment engine (ARQ technology).
Downloads - 10mn+
• Investment portfolio, latest news, reports and real-time updates can be App Store (iOS)
Angel One accessed anytime and anywhere. Rating 3.5
App
• Application is supported by gateways and digital bank in integration with 40 Awarded ‘Best Mobile
banks. UPI payments have also been integrated into the app. Trading App’ at Global
• Application for IPO can be made through the app, with just three simple clicks. Marketing Excellence
Awards 2016
• Stock portfolio tracker and web trading platform.

• Platform to invest in various asset classes, apply for IPOs, get latest trends and
manage portfolio at one place.
Angel One • Seamless movement through all investment accounts with one login.
NA
Trade • Latest market trends, stock screener and interactive charts to conduct in-
depth market research.
• Forex web platform to trade in currencies and web-based futures trading
platform to trade in derivatives.
6.5 mn trades
• Free of cost APIs to build cost-effective trading platform and open it up to over
500 mn+ Smart API
10 mn+ clients of Angel One.
requests
• Easy integration with programming languages like Python, NodeJs, Java, R,
100,000+ registered users
PHP, C# and Go.
Smart API Best Financial Services API
• Real-time assistance and a quick turnaround on testing and regulatory
at Inflection Awards
approvals.
Best Technology Provider
• Support from Angel One’s trade execution engine along with integration of live
for FinTech services at
market feed with strategies to set up a full-fledged trading platform.
InnTech Awards
• Rule-based investment engine to provide investment recommendations, free

from human intervention or human bias.
• Adopts time-tested and proven rules for investing in stocks. ARQ scans all type Average return of 9% in
of stocks to pick winners (Value stocks, quality stocks, high momentum stocks three months average
Angel ARQ and growth stocks). duration.
Prime
• Tested against challenging market conditions to deliver performance driven
Reduction of losses by 3-
results.
10% within 0.5-2 months.
• Strong risk management system to cut losses early and maximise profits.
• Free one-month subscription for new clients. Annual subscription fee – Rs 99.
Source: Company website, Play Store, App store. Note: Play store and App store ratings as at 23 November 2022.
The company continues to place emphasis on deploying advanced

analytical capabilities based on data science, machine learning
and AI across acquisition, onboarding, engagement,
communication, etc., which has aided growth in the challenging
market conditions. During 2QFY23, the company has focused on
scaling up organic traffic and revamped website with this purpose
(leading to 11% increase in page load speed and improving
efficiencies of features).
40
Thematic Report
Market shares improving

Angel’s improvement in market share in overall equities have gone
up from under 6% in 3QFY20 to 21.7% in 2QFY23, leading to quarterly
ADTO levels going up by 48x over the last 2.5 years. This massive
expansion had many legs and is closely linked to evolution of
customer base, in our view. As we show in Exhibit 78-79:
• The first leg of the expansion was driven by increase in cash

market share over 3QFY20 to 1QFY21 (from 14.3% to 17.3%). Quarterly
cash volumes are up 1.5x over 2.5 years, while at peak it was up
by 2.7x.
• In the second leg, we see a higher impact coming from

improvement in F&O market share (which went up from 5.6% in
3QFY20 to 21.7% in 2QFY23 – quarterly volumes up 60x since
1QFY20).
• While F&O volumes continue to remain strong, recent trends

highlight expansion in the commodity segment ADTO. In
commodity market, volumes are growing in options which is a
new product launched from MCX. Angel being the first entrant in
providing options on mobile as well as web platform has helped
in this market share gain (quarterly volumes up 6x since 1QFY20).
Exhibit 78: Significant rise in overall market Exhibit 79: Market share consistent after FY21;
share from FY20 levels (ADTO basis) Commodity market share ~50%+ (ADTO basis)
25 60
Overall Equity Market Share (%) Segment wise market share
20
40
15
%
%
10 20
5
0
20.8
20.8
20.9
22.7
21.0
12.3
21.2
21.7
6.9
5.9
16.1
8.2
2QFY22
2QFY23
2QFY21
1QFY23
3QFY20
1QFY21
1QFY22
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
0
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
F&O Cash Commodity
41
Thematic Report
Exhibit 80: Strong growth in ADTO as well as number of orders

14,000 250
211 207 230
12,000
180 200
10,000 152
137
8,000 150
Rs bn
115
mn
6,000 80 83 100
67
4,000 42
26 30 34
50
2,000
253 358 450 582 619 1,281 2,261 3,753 4,547 5,790 6,946 8,627 9,398 12,168
0 0
Overall ADTO Overall Orders
Exhibit 81: Cash ADTO declining due to decline in Exhibit 82: F&O volumes rise significantly in
orders and market uncertainty highly volatile market
80 70 14,000 200
57 55 59 57 173
52 60 12,000 147 153
60 47 48 48 48
150
40 50 10,000 116
40 8,000 92
Rs bn
Rs bn
mn
28
mn
40 75 100
23 30 6,000 58
19 20
20 4,000 38
20 26 50
16
10 2,000 5 7 8 10
26 27 32 33 58 69 61 69 60 50 51 46 39 39
0 0 0 0
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Cash ADTO Cash orders F&O ADTO F&O Orders
Exhibit 83: Commodity ADTO rising significantly with increasing market share
160 10
140 8.0
8
120
6.0
100
Rs bn
5.0 5.0 5.0 5.0 6

80 4.0 4.0 4.0 4.0 4.0
mn
60 3.0 3.0 4
2.0
40
2
20
25 33 42 49 38 67 60 60 55 60 66 97 105 150
0 0
Commodity ADTO Commodity Orders
42
Thematic Report
Exhibit 84: Strong but declining YoY growth in Exhibit 85: Sequential growth in overall ADTO
ADTO due to high base supported by F&O and commodity segments
800 150
ADTO YoY growth ADTO QoQ Growth
600
100
400
50
%
%
200
0
0
(200) (50)
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
1QFY21
3QFY22
3QFY21
4QFY22
4QFY21
2QFY20
2QFY21
2QFY22
2QFY23
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY21
3QFY22
4QFY21
4QFY22
Overall Cash F&O Commodity Overall Cash F&O Commodity
Topline has grown at a very fast clip

For Angel, currently, stock broking business is the primary revenue
driver; and management sees the same to be the main contributor
in the next six-seven years. However, the company will focus on SIPs
and direct Mutual Funds as well as on term insurance market. On the
back of primarily the broking revenue, Angel’s topline has grown at
33% CAGR over FY17-22. We expect Angel to clock 21% CAGR in topline
over FY22-25E.
Exhibit 86: Strong growth in revenue over FY17-22; expect momentum to continue over FY22-25E
50,000
Revenue from Operations
39,984
40,000
33,727
30,000 28,460
Rs mn
22,586
20,000
12,636
10,000 7,579 7,309 7,246

5,377
0
FY17 FY18 FY19 FY20 FY21 FY22 FY23E FY24E FY25E
Gross broking revenue the key driver
Share of gross broking revenue in the overall revenue pie has

remained in the range over the last few quarters – at around 70%. We
believe that over FY23-25E, the contribution of broking business to
gross revenues will continue in the similar range. Over a longer time
period; however, as the distribution businesses ramp-up, we expect
to see diversification in the revenue pool.
43
Thematic Report
Exhibit 87: Expect broking revenue to contribute 70%+ over FY23-25E
Segment wise revenue mix

100
80
60
%
40
20
0
FY21 FY22 FY23E FY24E FY25E
Gross Broking Revenue Interest Income Depository Ancilliary Transaction Revenue Distribution Other
Rapid gain in market share in the F&O segment has led to the
segment now providing 80%+ of gross broking revenue compared to
around 40% in mid-FY20 (refer Exhibit 88), while that for the cash
segment has moved from 40%+ earlier to 13% in 2QFY23.
Consequently, gross broking grew at a very fast pace (high double-

digit YoY growth rates) over the last few quarters, again due to
strong growth in all segments other than cash equities. We expect
steady state growth to recover in the cash segment in FY24/25E,
while F&O and other segments continue to see strong growth rates.
Exhibit 88: F&O segment contribution to gross broking revenue expected at ~80%+
100 Gross broking revenue mix
80
60
%
40
20
0
F&O Cash Commodity Currency
44
Thematic Report
A flat-fee revenue model reduces volatility

Angel had moved from a traditional broking model to a flat fee
model during its transformation journey. Currently, all the digital
sales cater to the flat fee business, while the business brought in by
sub-broker network partly is in the flat fee model.
The flat fee model, where customers are charged based on number
of orders, has reduced the volatility of revenue stream from market
cyclicality. Number of trades on the NSE has never declined except
for one year when there were regulatory changes. Hence,
management remains confident of sustainability due to its order
count-based revenue model.
Exhibit 89: Flat fee plan dominates in gross client addition

Gross client addition mix – plan wise
100
10 10 10 7 8 8 8 8 8
80
60
%
90 90 90 93 92 92 92 92 92
40
20
0
2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23
Flat Fee Traditional Plan
Source: Company Presentation, B&K Research
Exhibit 90: Aggressive growth under flat fee Exhibit 91: Consistent growth under traditional
plan plan
Gross client addition – flat fee Gross client addition – traditional plan
1,600 140
1,351 117
1,400 1,231 120 107
1,181 100 105
1,200 1,125 1,152 96
1,082 100 96
1,000 80
855
80
'000
'000
800 54
60 53
600 496 458
400 40
200 20
0 0
4QFY…
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
3QFY22
3QFY21
4QFY21
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
3QFY22
3QFY21
4QFY22
4QFY21
45
Thematic Report
Exhibit 92: Almost all ADTO contribution through flat fee plan
ADTO Contribution - Plan wise

100 5 5 4 4 4
7 8
16 17
80
60
%
93 92 95 95 96 96 96
40 84 83
20
0
2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23
Flat fee Traditional plan
Exhibit 93: Angel One broking charges
Type of trade Angel One

Equity Delivery Zero
Equity Intraday 0.25% or Rs 20/executed order whichever is lower
Equity Futures 0.25% or Rs 20/executed order whichever is lower
Equity Options 0.25% or Rs 20/executed order whichever is lower
Currency Futures 0.25% or Rs 20/executed order whichever is lower
Currency Options 0.25% or Rs 20/executed order whichever is lower
Commodity Futures 0.25% or Rs 20/executed order whichever is lower
Commodity Options 0.25% or Rs 20/executed order whichever is lower
Account Opening Charges NA
No AMC charges for first year.
Second year onwards:
Annual Maintenance Charges Holding value up to Rs 50,000 – No AMC
Rs 50,001 to Rs 200,000 – Rs 100/year + Tax
Above Rs 200,000 – Rs 20/month + Tax
Exhibit 94: Strong growth in orders; F&O segment dominates significantly

250
Number of orders
8
200 5 6
4
150 4
4 147 173
mn
116 153
5
100 75 92
5 5 58
3
16 26 38
50 4
2 3 4 10
5 7 8 47 48 52 57 55 59 57 48 48
28 40
19 20 23
0
Cash orders F&O Orders Commodity Orders
46
Thematic Report
Exhibit 95: Revenue per order declining across segments owing to increasing new-to-market clients
80
Revenue per order
65
57
60
48 48 47
46 44
38 36 38
40 35 34
Rs
33 32 31 31
30 27 27 26 25 25 25 26
23 21 19 20 19 18 18 17 15 15
20 14 14
0
F&O Cash Commodity
47
Thematic Report
MTF book scaling up

Angel offers margin trading funding (MTF) to its clients. The segment
has now scaled up to a funding book level of Rs 16,687 mn at the end
of 2QFY23. The company has a 9-10% net interest margin on this
business (with charges of 18% and cost of borrowing around ~8.5%
from banks or issuance of commercial papers). The book remains
very granular and low in risk exposure as 80-85% customers have
less than Rs 0.1 mn exposure.
Exhibit 96: Client funding book to remain Exhibit 97: Borrowings increased after new
volatile due to market conditions margin regulations but have normalised now
18,000 35,000
17,788 Borrowings
Client Funding Book 30,000
17,000 16,687
16,518 25,000
15,947
16,000 20,000
Rs mn
Rs mn
15,241 15,000
15,056
15,000 10,000
30,320
12,060
12,296
6,580
12,577
5,909
3,286
12,156
12,129
5,000
11,715
14,000
0
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
1QFY21
3QFY22
3QFY21
4QFY22
4QFY21
13,000
The funding book remains volatile because this business is heavily

reliant on the market conditions and hence growth will not be linear.
Scale-up of margin funding book as well as FDs with exchanges has

led to robust growth in interest income for Angel. We highlight our
expectation of steady growth in this component of income over
FY22-25E as highlighted in Exhibit 99.
Exhibit 98: Consistent growth in interest income Exhibit 99: Steady growth in interest income
with increasing margin lending expected over FY23-25
1,400 7,000
Interest Income 6,282
Interest Income
1,200 6,000 5,463
1,000 4,750
5,000
800
Rs mn
3,654
Rs mn
4,000
600
3,000
400 1,997
2,000
1,063
1,244
200
1,210
546
896
986
395
399
709
397
441
615
0 1,000
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
0
48
Thematic Report
Distribution revenue as a diversification tool

Angel currently sales third party products through its Angel BEE app,
which are largely mutual funds and insurance products. The
company plans to enter the loan products segment in future. Angel
BEE will later on get merged into the Super-App. This is Angel’s foray
into the wealth management business for retail investors. Mutual
fund journeys in the Super-App will start soon. The company has
sought for an AMC licence, but it does not intend to compete with
other leading AMCs. The goal is to fill in the gaps in market where the
company can offer passive funds to customers at negligible cost of
fund management, e.g. smart beta funds.
• Mutual Funds: The company is tied up with all the AMCs where it
sells products through the direct mode. While this is not revenue
generating, Angel believes that this will increase the
engagement of clients and result in revenue generation from
other segments.
• Insurance: Angel is currently tied up with six insurers as the

company is undertaking distribution through the corporate
agency model. The company will expand soon as it gets into the
insurance broking model.
• Loan products: The loan products segment will be added in the

next three-four quarters, in which the company will identify client
requirements through AI and match it with the product suite.
Exhibit 100: Distribution revenue down from 3QFY22 peak due to slack in mutual fund activity
140
Distribution revenue 121
120 108
100
Rs mn
75
80 69 69
60 47
40 42
40 32 32
25
19
20
0
49
Thematic Report
Operating profit margin to remain 45-50%

Angel is currently in investment mode where the company expects
the same to continue for the next four quarters. However,
management remains confident of maintaining OPM in the range of
45-50%, while investments continue towards acquiring market share
or hi-tech capabilities.
Exhibit 101: Operating margin to be impacted owing to investments; remain in range if 45-50%
55
Operating margin (%)
50
51.8
49.7 50.6
45 48.4 48.1
40
%
35
30
29.5
25
20
FY20 FY21 FY22 FY23E FY24E FY25E
We highlight the various components in Angel’s cost structure

below:
Employee benefits expense
In terms of hiring, although technical team for current projects have

been completed, recruitment for engineering positions is ongoing
although a large part has been completed. Majority senior level
positions have been filled. The company has been able to attract
tech talent from global companies. Going forward, management
guides for 10-12% increment in the employee cost along with ESOPs
to employee.
Angel launched ESOP in 2021 and will be granting 10% of capital over
10-year period with a cap of 3% every year, for both old and new
employees.
50
Thematic Report
Exhibit 102: Recruitment of top tech talent and ESOP cost to increasing employee cost consistently
5,000
Employee benefit expense
4,252
3,974
4,000 3,714
Rs mn
3,000 2,653
2,000 1,598 1,706

1,504
1,351 1,245
1,000
0
IT related capex
Since Angel is focusing on becoming a tech platform, the company

will incur some capex in the runway. FY23 will be capex heavy, with
maintenance capex to be incurred in the next five years. The capex
would entail:
• Movement of IT infra to new data centre.
• Data centre capacity expansion.
• Constituting a disaster recovery site.
Management expects this to increase fixed asset by Rs 540 mn to Rs

2.2 bn.
Marketing expense
Other expense, which is largely customer acquisition cost, will keep

on increasing with focus on customer acquisition. Management has
highlighted that 90% of the marketing spends are elastic in nature.
Exhibit 103: Consistent increase in other expenses due to focus on aggressive customer acquisition
2,000
Other Expenses
1,609 1,563
1,526
1,500 1,383
1,318
1,122
Rs mn
1,008
1,000
603 640
500 336 354 319 360
0
2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23
51
Thematic Report
Exhibit 104: Cost-to-income ratio remains elevated, but down from peak
80
Cost to Income Ratio
75
75.7
70 72.8
65 68.4
%
64.7 63.9 63.9 64.3

60 62.9 63.0
62.0 61.3 61.9
55
57.2
50
Cost to Income Ratio
Expect PAT to compound by 23% over FY22-25E

We expect Angel to see a 23% CAGR in PAT over FY22-25E. We forecast
a slightly slower growth over 2HFY23, followed by pick-up in growth
over FY24-25E subject to normalised market conditions. We believe
Angel’s operating margins to expand to the higher end of the 45-50%
guided range in operating margins by FY25E, driven by operating
leverage playing out to an extent (although margins may remain
slightly lower than that experienced in FY22).
Exhibit 105: Operating margins likely to be at higher end of 45-50% guided range
55
Operating margin (%)
50
51.8
49.7 50.6
45 48.4 48.1
40
%
35
30
29.5
25
20
52
Thematic Report
Exhibit 106: PAT likely to grow at a consistent pace ~23% CAGR

14,000
PAT
11,531
12,000
10,000 9,461
7,640
Rs mn
8,000
6,249
6,000
4,000 2,968
2,000 823
0
53
Thematic Report
Initiate coverage with a Buy recommendation

We initiate coverage on Angel One with a Buy recommendation on
the stock. The stock is currently trading at 13.9x/11.4x its FY24/25E
earnings. Our 3-stage DCF-based model values Angel One at
16.6x/13.6x FY24/25E earnings, with a target price of Rs 1,883.
Exhibit 107: Assumptions for valuation model

Avg revenue growth FY22-25E 21%
Operating margin FY22-25E 37.6%
Cost of equity 15.0%
Terminal growth rate 4.0%
We highlight our valuation assumptions in Exhibit 107. As we see in

Exhibit 108, in comparison to its historical trading range, Angel is
trading near 1 standard deviation above historical P/E multiple.
Exhibit 108: Angel’s historical trading multiples (One-year forward P/E)

20
18
16
14
12
10
8
Jan-22
Jan-22
Oct-22
Oct-22
Nov-21
Nov-21
Nov-22
Nov-22
Feb-22
Mar-22
Mar-22
Mar-22
May-22
May-22
Jun-22
Jun-22
Jul-22
Jul-22
Aug-22
Aug-22
Sep-22
Sep-22
Apr-22
Apr-22
Dec-21
Dec-21
Dec-21
1Y Fwd P/E Average +1 sd - 1 sd Max Min
54
Thematic Report
Exhibit 109: Angel One’s management profiles
Name Role Experience
Mr Dinesh D. Chairman and Promoter of Angel Group having experience in capital markets of
Thakkar Managing Director over three decades.
Mr Narayan 20+ years of experience in tech functions at Google, Microsoft,

CEO
Gangadhar Amazon, Uber, Ola.
25+ years of experience across multiple industries, 7+ years at

Mr Vineet
CFO Angel One, Heads treasury, corp. fin., accounts, secretarial,
Agrawal
reporting & controlling, tax, audit, IR and CSR.
Mr Jyotiswarup 20+ years of experience in building tech products, worked with

CTO
Raiturkar Walmart Labs’, Intuit, Goibibo, Samsung Research and Microsoft.
25+ years of experience in building technology products, leads

Mr Dinesh
CPTO technology, product and design teams, worked with Ola Electric,
Radhakrishnan
Rakuten India, Bloomberg and Intel.
21+ years of experience in Capital Markets, Heads Compliance and

Dr. Pravin Bathe CL&CO
Legal, Worked with SEBI, Edelweiss and Citigroup.
Mr Prabhakar
CGO 19+ years of experience, Worked with PayU, Marico, CEAT, Danone.
Tiwari
22+ years of experience, 6+ years at Angel One, develops and

Mr Subhash implements HR processes and employee skill development,
CHRO
Menon knowledge and productivity enhancement, worked with IndiaFirst
Life, SBI Life and USV.
14+ years of total experience, ~10 years at Angel One. Built and led
Mr Devender various functions including revenue, product, online marketing,
Head – Online Revenue
Kumar sales, technology, analytics, strategy and data science, worked
with Motilal Oswal, Yahoo!.
23+ years of total experience, 21+ years at Angel One, worked

Mr Bhavin Head - Operations, Risk
across multiple functions – Operations, Risk Management, Business
Parekh & Surveillance
and Product and Customer Support.
55
Thematic Report
Angel One
Income Statement Key Ratios

Yr ended 31 Mar (Rs mn) FY22 FY23E FY24E FY25E
Yr ended 31 Mar FY22 FY23E FY24E FY25E
Total Income Gross Revenues
- Interest Income 3,328 4,168 4,793 5,512 Gross Broking 15,737 20,405 24,351 29,065
- Fees and Comm. Income 18,961 24,292 28,934 34,473 Interest Income 3,654 4,750 5,463 6,282
- Net gain on fair value chg. 297 0 0 0 Other 3,662 3,886 4,583 5,408
Revenue From Operations 22,586 28,460 33,727 39,984 - o/w Depository 1,246 1,059 1,218 1,401
-Other Income 465 582 670 770 - o/w Ancillary Transaction Rev. 1,520 2,280 2,736 3,284
Total income 23,051 29,042 34,397 40,755 - o/w Distribution 345 276 317 365
Growth (%) 77 26 18 18 - o/w Other 541 271 311 358
- Finance cost 721 903 1,038 1,194 Total 23,053 29,042 34,397 40,755
- Fees and Commission exp. 5,502 6,316 7,234 8,273 Gross Revenue Mix (%)
- Employee benefit expense 2,653 3,714 3,974 4,252 Gross Broking 68.3 70.3 70.8 71.3
- ESOP 156 669 470 330 Interest 15.9 16.4 15.9 15.4
- Depreciation & Amortization 186 270 338 422 Depository 5.4 3.6 3.5 3.4
- Other expenses 5,349 6,954 8,692 10,865 Ancillary Transaction Revenue 6.6 7.9 8.0 8.1
Total Expenses 14,682 18,826 21,746 25,337 Distribution 1.5 1.0 0.9 0.9
PBT 8,369 10,216 12,651 15,418 Other 2.3 0.9 0.9 0.9
Growth (%) 104 22 24 22 Gross Broking Revenue Split (%)
Tax 2,110 2,576 3,190 3,887 F&O 71.8 81.7 82.1 82.6
PAT 6,249 7,640 9,461 11,531 Cash 23.6 13.3 12.8 12.3
Growth (%) 110.5 22.3 23.8 21.9 Commodity 3.7 4.1 4.1 4.1
Currency 1.0 1.0 1.0 1.0

Balance Sheet
Revenue per order (Rs)
F&O 26 25 25 25
Total Financial Liabilities 55,779 71,379 67,967 64,726
Cash 16 14 14 14
Total Non-Financial Liab. 576 576 576 576
Commodity 35 28 28 28
-Equity Share Capital 829 829 829 829
No of orders (Mn)
-Other Equity 15,015 20,182 27,171 36,228
F&O 430 667 800 960
Total Equity 15,844 21,011 27,999 37,057
Cash 228 194 223 256
Total Liabilities 72,199 92,966 96,543 102,359 Commodity 17 30 36 43
Profitability ratios (%)

-Cash and Cash Equivalents 48,750 51,500 51,500 51,500 Operating margin 51.8 48.1 49.7 50.6
-Receivables 5,653 4,805 4,805 4,805 PAT margin 27.1 26.3 27.5 28.3
-Loan 13,575 13,575 13,575 13,575 RoE 46.0 41.5 38.6 35.4
-Investments 187 1,000 1,250 1,250 Valuations ratios (x)
-Other Financial Assets 1,947 19,981 23,307 29,124 EPS 75.4 92.2 114.2 139.2
Total Financial Assets 70,111 90,861 94,438 100,254 P/E 21.3 17.1 13.8 11.3
Non-Financial Assets 2,088 2,105 2,105 2,105 BVPS 191.2 253.6 337.9 447.2
Total Assets 72,199 92,966 96,543 102,359 P/B 8.4 6.2 4.7 3.5
56
Thematic Report
Initiating Coverage ICICI Securities

BUY High quality franchise at inexpensive valuation
Share Data ICICI Securities’s (ISEC) transition in business model from a
Market Cap. Rs 170.4 bn (US$ 2,088 mn)
traditional broker to offering best-of-both worlds to customers is
Price Rs 528
slowly positioning the company for turnaround in growth and
Target Price Rs 680
steady compounding. Additionally, optionalities emerge from
BSE Sensex 62,505
areas like private wealth management which is a sweet-spot
Reuters ICCI.BO
Bloomberg ISEC IN
given India’s demographics. We conservatively (owing to
6M avg. daily turnover (US$ mn) 2.4 sensitivity to market conditions) estimate 13% CAGR in both
52-week High/Low (Rs) 838/408 Revenue/PAT over the next three years. Given ISEC’s inexpensive
Issued Shares 323 mn valuations (~10x FY25E earnings), we initiate coverage with a
Valuation Ratios Buy recommendation with a target price of Rs 680, valuing ISEC
Year to 31 Mar FY23E FY24E FY25E at an implied multiple of 13.3x FY24E EPS based on our DCF model.
EPS (Rs) 41.2 51.1 61.4 Best-of-both worlds exposure for a shareholder
+/- (%) (3.9) 24.0 20.2
PER (x) 12.8 10.3 8.6 ISEC’s customer base reflects a mix of vintage cash equities
PBV (x) 7.0 5.9 4.9 focused customer set (largely acquired from ICICI Bank) as well as
Dividend Yield (%) 5.1 6.3 7.6 new-to-market clients (80%+ of ISEC’s incremental customer
Shareholding Pattern (%) base) who are focused on trading and derivatives business. While
market trends are difficult to predict, the mix provides advantage
Promoters 75
FIIs 7
of playing the story on either front while providing a cushion of
MFs 2 diversification in any scenario of change in trends.

BFSI's 5 Product focus encouraging – quality of earnings improving
Public & Others 11
Broking business is increasingly turning out to be a Fintech game
by providing customers with best set of tools and experiences for
1,000
their individual needs. ISEC’s new set of products support both the
800
600 sophisticated traders as well as market novices. ISEC’s reliance on
400 fee income is increasing, as opposed to earlier gearing towards
200
cyclical brokerage income. Further, distribution of third-party
0
products is being done to make earnings even more structural.
Dec-19
Nov-20
Feb-20
Jul-20
Nov-21
Nov-22
Sep-20
Feb-21
Jul-21
Feb-22
Jun-22
Sep-22
Apr-20
Sep-21
Apr-21
Apr-22
Transitioning into a wealth management franchise

ICICI Securities (Actual)
Private wealth management business’s share is increasing in the
Sensex (Rebased)
product mix, which should imply stickier long-term AUM. Given
brand recognition, access to partnerships like ICICI Bank and
HSBC, ISEC is well positioned to deliver on this business, in our view.
PAT 13,826 13,285 16,476 19,811
Equity ADTO (Rs bn) 45.9 39.0 44.8 51.6
Derivative ADTO (Rs bn) 1,063 1,914 2,201 2,532
Total AUM ex direct (Rs bn) 503 554 623 701
Return on equity (%) 65.0 49.9 51.7 51.9
57
Thematic Report
Focusing on diversification in retail business

ISEC’s journey over the last few years has been focused on
diversification. Once, one of the largest brokers in terms of market
share in the broking space, the company saw the impact of rise of
discount brokers over the last few years as shown in Exhibit 110 –
particularly since FY21.
Exhibit 110: Top 10 players command 78% market share with respect to NSE active clients
25
Market Share of Top Players - NSE Active Clients
20
15
10
%
0
Zerodha
Kotak Sec
Grow
Upstox
Angel One
5Paisa
HDFC Sec
MOFSL
ISEC
IIFL
FY18 FY19 FY20 FY21 FY22 YTD'23
ISEC has now transitioned to offering a wider bouquet of products to

customers through their platforms which would make it a full-
fledged investment platform for its customers which has quite a
wide spectrum – from HNIs on one hand to new-to-market Gen-Z
customer on the other hand.
Thus, in terms of overall revenue mix, retail broking revenue’s share

has come down significantly, from 45%+ in FY20 to 33% in 1HFY23. This
has been a function of not only market cycles (ISEC’s retail broking
business has a higher salience from the cash segment, where
trading levels off-late has been muted), but also by design (shifting
away from a turnover-based revenue model to more fee-based
revenue model and introduction of fees and charges – we discuss
on this further in the upcoming sections).
Additionally, ISEC is also undertaking distribution of third-party

product as well as institutional broking and capital markets business
that further diversifies its revenue mix.
58
Thematic Report
Exhibit 111: Aggressive focus towards diversification from retail broking business
100
80
60
%
40
20
0
Retail broking Interest income from lending book Subscription and other charges
Distribution Insititutional business Others
59
Thematic Report
Change in retail broking business model

ISEC’s retail broking model in itself has undergone a marked shift, via
creation of a few allied revenue streams like:
• Interest income on lending book.
• Subscription fees for categories like prime.
• Charges in broking business.
These changes have been brought in through the culmination of

new set of products and pricing structure. We believe that this could
be a key lever to address the cyclicality of ad valorem revenue
model to an extent, thereby improving the quality of income.
We note, that even factoring in benefits of a low base, these

segments grew well in a year which would otherwise be
unappealing in terms of broking revenue growth (refer Exhibit 112).
ISEC’s business sees 60-65% of revenue coming from the cash
segment which is quite sensitive to market cycles.
Exhibit 112: Allied revenues show consistent quarterly growth amidst market uncertainty
150
Allied revenues QoQ growth
100
%
50
(50)
Interest on lending book Prime fees Other fees
Share of broking revenue, i.e. from cash equities and derivatives

have now come down from 90% in 1QFY20 to 57% in 2QFY23, while that
of the allied revenue has gone up from 10% to 43% in the same
periods (refer Exhibit 113).
60
Thematic Report
Exhibit 113: Diversification from retail brokerage revenue stream

100
10 12 15 15 10 15 17 20 25 30
80 34 38
45 43
60
%
90 88 85 85 90 85
40 83 80 75 70 66 62
55 57
20
0
Retail brokerage Allied Revenue
61
Thematic Report
Market share trends

Client acquisition and market share in NSE active client
Based on NSE active clients, ISEC’s market share has found some
stability in FY21, FY22 and YTD FY23, in the range of 8.3-8.5%, after
facing strong competition from the discount brokers. In terms of NSE
active clients, ISEC is now the 5th largest player. The company also
lost some competitive advantage with margin related regulatory
changes coming in during FY21.
Exhibit 114: Market share stabilising after decline in FY21

10.5
NSE active market share
10.0
10.1 10.0 10.0
9.5 9.8
9.0
%
9.2
8.5
8.7
8.6
8.0 8.4 8.4 8.4 8.4
8.3 8.2
8.0
7.5
NSE active market share
As the company was focused towards digital acquisition of

customers during FY21, growth in customer base has been strong,
with around 8.4 mn customers at end-2QFY23. Particularly since
4QFY21, acquisition run-rate has gone up significantly (from earlier
0.08-0.14 mn till 3QFY21 per quarter to 0.6-0.7 mn at its peak and
currently at 0.45-0.46 mn in the last two quarters).
Customer demographics have changed significantly with almost

half of the customers below 25 years of age, and almost two-thirds
below 30 years of age in the incremental client base, with around
85% coming from Tier 2/3 cities. Active client ratio has been 40%+ in
the last five quarters, from around 30% two years back.
62
Thematic Report
Exhibit 115: Aggressive growth in overall client Exhibit 116: Strong customer acquisition; FY22
base from FY22 saw peak customer additions
10 12 800
New customers acquired
10 700
8
600
8
6
500
6
mn
in '000
4 400
4
2 300
2
4.5 4.6 4.7 4.8 4.9 5.0 5.1 5.4 5.8 6.3 7.0 7.6 8.0 8.4 200
0 0
100
583
354
389
462
447
676
618
106
139
2QFY20
98
2QFY21
2QFY22
2QFY23
1QFY20
3QFY20
1QFY21
1QFY22
1QFY23
94
4QFY20
3QFY21
3QFY22
4QFY21
4QFY22
83
92
113
0
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Client base Growth
Activation rate for clients joining in the quarter and starting to trade
in the same quarter has settled down a bit to 59% in 2QFY23 due to
the market conditions. It used to hover in the range of 70-80% in the
peak of the previous cycle (refer Exhibit 120).
Exhibit 117: Increasing interest towards Exhibit 118: 60%+ of new clients are less than 30
investments among young investors years of age
60 80
Customers acquired <25 years of age Customers acquired < 30 years of age
50 70
50.2 49.1
68.4
40 48.1 60
66.2
65.8
45.4
65.5
44.4
61.9
41.5
61.5
60.0
39.4
30 50
%
%
20 40
44.4
43.1
22.5
41.6
40.6
39.3
18.0 17.0 16.1

38.2
17.5
38.1
10 15.8 30
13.5
0 20
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
63
Thematic Report
Exhibit 119: Majority of new clients coming in Exhibit 120: Activation rates declining due to
from Tier-2/3 cities volatile market conditions
90 100
Activation rates
Customers from Tier II & III
87.1
80 80
85.5
84.7
84.2
83.6
84.4
82.0
79.5
79.9
77.9
74.2
74.2
70 60
71.0
67.8
66.9
63.0
59.3
%
69.4
57.9
%
56.9
66.8
66.7
60 40
44.1
60.8
59.6
59.4
58.2
33.8
50 20
40 0
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Retail broking market share
However, given that a large proportion of ISEC’s retail broking

revenue model is volume-based, we believe that market share
based on turnover would be a more appropriate metric to measure
the competitive positioning. ISEC’s market share in the focus retail
equity ADTO was at 10.6% in 2QFY22, a six-quarter-high, although
lower than peak market shares of 12%+ recorded in 1Q-3QFY21.
Retail derivative market share
In the retail derivative space, ISEC’s market share has fallen from
earlier 10-12% to 3-4% range currently, with 2QFY23 at 3.7%, again a
five-quarter high. Although, run-rate in derivative ADTO has gone up
significantly (in 2QFY23 derivative brokerage was up 24% YoY) in the
last five quarters (refer Exhibit 123), this segment is dominated by
discount brokers.
While traditionally cash equities focused, ISEC has started to focus

on this segment off late with introduction of competitive pricing and
tools suited for the breadth of customer mix, which could lead to
traction in this segment going ahead. In 2QFY23, the management
outlined that they are seeing growth in all underlying parameters
like number of customers and orders. The company is investing in
this space using tools like flash trades, integrated watch list, margin
product, etc.
64
Thematic Report
Exhibit 121: Equity ADTO market share seems to Exhibit 122: Rise in retail market share after five
be stabilising at 8.5%+ stable quarters
12 13
Market share Retail Market share
11 12
12.3
12.2
12.1
11.1
11
10
10.7
10.5 10
10.7
%
10.6
10.5
10.4
9
9.6
%
10.0
10.0
9.9
9
9.8
9.7
9.2
9.7
9.1
8.9
8.9
8.8
8
8.7
8.7
8
8.3
8.1
8.4
8.0
7 7
6 6
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Exhibit 123: Implementation of new margin Exhibit 124: Significant competition from
norms impacted derivative ADTO discount brokers led to decline in market share
2,500 10
Derivative ADTO Market share
2,000 8
8.9
8.8
8.7
8.0
7.4
7.3
1,500 6
Rs bn
6.3
%
1,000 4
500
3.3
2
3.1
3.1
3.0
3.0
2,026
2.9
1,066
1,044
1,336
2.8
1,547
1,149
983
820
687
786
677
818
819
619
0 0
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Exhibit 125: Retail derivative market share stable at 3.5%+ after steep decline
14
Retail Market share
12
12.3 12.3
10 11.0 11.4
10.6 10.3
8
%
8.1
6
4
4.0 4.2
2 3.7 3.5 3.3 3.5 3.7
0
65
Thematic Report
Allied revenues in retail broking

ISEC has started to build-up allied revenue streams in retail broking
which in our view should reduce volatility and improve quality of
income for the segment. The major revenue streams are:
• Interest income on lending book.
• Subscription fees for categories like prime.
• Charges in broking business.
We expect these revenue streams to be quite sticky in nature and

going forward to bring secularity in revenue development. Currently,
the allied revenue portion contributes 30-35% of the retail broking
revenue.
Exhibit 126: Allied revenue streams commanding higher share in retail broking revenue mix
100
80
60
%
40
20
0
Retail brokerage Interest on lending book (MTF, etc.) Prime Fees Other fees and charges
Margin trade funding and ESOP funding
ISEC’s margin trade funding (MTF) book has seen strong growth in
the last 10 quarters – increasing from Rs 8,911 mn at end-1QFY21 to Rs
62,056 mn at end-2QFY23 – a 7x rise. With market environment
supportive, we expect this book to grow alongside. While number of
customers who are using this facility has gone up, it stands at ~82k
in 2QFY23, highlighting significant scope for growth.
Interest rates offered to customers are very competitive – at 8.7% at

the lower end and sub-10% at the blended level. Management
attributes competitive rates due to a low cost of funds (4.5-5.0%) on
the back of its balance sheet strength (AAA rated). Duration remains
three-six months and ticket size is quite fragmented.
66
Thematic Report
Exhibit 127: MTF book on the rise with increased F&O activity
70,000 22.0 21.8 22.2 22.3 22.4 23.0 25
60,000 18.4 19.2

16.7 20
50,000 16.0
13.1
Rs mn
40,000 15
%
9.1 9.2 8.4
30,000 10
20,000
57,408
57,654
39,847
5
21,089
54,971
10,579
52,321
29,212
5,865
4,543
12,277
4,228
5,579
10,000 8,273
0 0
MTF average book MTF exit market share (%)
Exhibit 128: Interest on lending operations show Exhibit 129: MTF customers growth reflects
strong growth due to competitive rates strong scope for expansion
2,000 100,000
Interest on lending book
MTF Customers 81,609
Number of customers
80,000
1,500
60,000 50,691
Rs bn
1,000
40,000
500 20,000
1,458
1,538
1,472
1,512
443
824
335
230
447
587
1,161
199
261
175
0
0 1QFY21 2QFY23
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
MTF Customers
Linear (MTF Customers)
The company also undertakes ESOP funding, and the book has
scaled up to Rs 10,659 mn in 2QFY23. Recent regulatory intervention
has led to ESOP funding being restricted to Rs 2 mn. Hence, the
company has tied-up with Chola Finance and under the
arrangement sources customers and manages relationship. Chola
provides credit which is required beyond the amount that exceeds
Rs 2 mn. The company expects this to scale-up over the next couple
of quarters.
Income from fees and charges
ISEC has introduced new variants of plans (Exhibit 130) where the
brokerage rates have been rationalised to become competitive (e.g.
in the NEO plan, customers can trade in derivatives for zero charges
while discount brokers charge Rs 20 per trade), while the business
model revolves around small charges.
67
Thematic Report
Additionally, the company has brought in subscription fees for its

‘Prime’ subscription. This has scaled up >10x since 1QFY20 with current
prime customer base at 1.16 mn and contribute around 70% of
broking revenue currently (Exhibit 131). Below we outline some details
about the plans:
Prime plan: Prime plans have both a renewal model as well as

lifetime plans. As customers move up the subscription ladder, they
start getting better brokerage rates (as low as 9 bps for the highest
plan). ISEC’s focus is not only on the subscription fee but also to
activate customer using this proposition and get complete wallet
share in terms of brokerage, MTF and income through other
products. Management highlighted that prime fees is a small
component of overall ARPU. Contribution from prime revenues have
stabilised at about 70-75% of overall portfolio.
Neo plan: ISEC has introduced this plan to compete with discount
brokers, particularly for the derivative segment. Neo plan has made
derivative charges free.
68
Thematic Report
Exhibit 130: ISEC’s key brokerage plans and features
ICICI Direct
Trade type Prepaid Brokerage Plan
ICICI Neo Plan I-Secure ICICIDirect Prime
(Lifetime)
Rs 2,500 - 0.25% Rs 299 (Annual) - 0.27%

Rs 5,000 - 0.22% Rs 999 (Lifetime) - 0.22%
Rs 12,500 - 0.18% Rs 1,999 (Lifetime) - 0.18%
Equity Delivery Zero 0.55%
Rs 25,000 - 0.15% Rs 2,999 (Lifetime) - 0.15%
Rs 50,000 - 0.12% Rs 3,999 (Lifetime) - 0.12%
Rs 1,00,000 - 0.07% Rs 4,999 (Lifetime) - 0.1%
Rs 2,500 - 0.25% Rs 299 (Annual) - 0.27%

Rs 5,000 - 0.22% Rs 999 (Lifetime) - 0.22%
Rs 12,500 - 0.18% Rs 1,999 (Lifetime) - 0.18%
Equity Intraday Rs 20/order 0.28%
Rs 25,000 - 0.15% Rs 2,999 (Lifetime) - 0.15%
Rs 50,000 - 0.12% Rs 3,999 (Lifetime) - 0.12%
Rs 1,00,000 - 0.07% Rs 4,999 (Lifetime) - 0.1%
Rs 2,500 - 0.025% Rs 299 (Annual) - 0.027%

Rs 5,000 - 0.022% Rs 999 (Lifetime) - 0.022%
Rs 12,500 - 0.018% Rs 1,999 (Lifetime) - 0.018%
Equity Futures Zero 0.05%
Rs 25,000 - 0.015% Rs 2,999 (Lifetime) - 0.015%
Rs 50,000 - 0.012% Rs 3,999 (Lifetime) - 0.012%
Rs 1,00,000 - 0.007% Rs 4,999 (Lifetime) - 0.01%
Rs 2,500 - Rs 35/lot Rs 299 (Annual) - Rs 40/lot

Rs 5,000 - Rs 30/lot Rs 999 (Lifetime) - Rs 35/lot
Rs 12,500 - Rs 25/lot Rs 1,999 (Lifetime) - Rs 25/lot
Equity Options Rs 20/order Rs 95/lot
Rs 1,00,000 - Rs 7/lot Rs 4,999 (Lifetime) - Rs 10/lot
Currency Futures Rs 20/order Rs 20/order Rs 20/order Rs 20/ order
Currency Options Rs 20/order Rs 20/order Rs 20/order Rs 20/ order
Commodity Futures Rs 20/order Rs 20/order Rs 20/order Rs 20/ order
Commodity Options Rs 20/order Rs 20/order Rs 20/order Rs 20/ order
Account Opening One-time NA Lifetime Charge Rs 299 (Annual)
Charges subscription fee – Rs 2,500 Rs 999 (Lifetime)
Rs 299 + 18% GST Rs 5,000 Rs 1,999 (Lifetime)
Rs 12,500 Rs 2,999 (Lifetime)
Rs 100,000
Annual Maintenance Rs 300 from first Rs 700 from second Rs 700 from second year
Rs 700 from second year onwards
Charges year year onwards onwards
Features/Products
Access to Brokerage for Pay-out of up to Rs 10 mn More than 50% brokerage
Offered
research team Margin and Margin within 5 minutes on selling reduction across all products.
Plus - 0.05% shares.
Access to funds Instant pay out for stocks sold.
within 5 minutes Minimum brokerage Buy stock and pay later at 8.7% Buy stocks and pay later at 8.7% p.a.
of selling shares for transactions up p.a.
Access to exclusive research
to Rs 50,000 or 2.5%
Option to refund of unutilised content and website.
whichever is lower.
amount after a year.
Zero brokerage on intraday stop
Valid for lifetime even after loss products.
completely utilising prepaid
Special reduced interest on
balance.
delayed payments in equity
margin products.
69
Thematic Report
Exhibit 131: Stable growth in client base of prime plan

1,400 70
1,200 60
1,000 50
800 40
in '000
%
600 30
400 20
200 10
100 165 235 318 376 425 528 653 750 865 965 1,059 1,065 1,162
0 0
Prime customer base Growth in prime client base
Exhibit 132: Prepaid client base witnessed significant growth after downtrend due to attractive
lifetime plans
120 35
30
100
25
80 20
15
in '000
60
%
10
40 5
0
20
(5)
93 94 93 92 91 90 90 88 87 84 81 82 105 107
0 (10)
Prepaid customer base Growth in prepaid client base
Exhibit 133: Neo client base growing consistently every quarter

300 120
250 100
200 80
in '000
150 60
%
100 40
50 20
50 101 145 184 215 241 267
0 0
4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23
Neo customer base Growth in neo client base
70
Thematic Report
Exhibit 134: Prime and prepaid plans Exhibit 135: Prime and prepaid plans
contributing 40%+ to NSE actives contribution to revenue increases to 70%
60 80
Prime + Prepaid as % of NSE active Prime + Prepaid as % of Broking revenue
70
50
71.1
60
69.6
66.9
65.1
64.5
64.1
47.9
63.6
40
46.9
62.1
61.5
45.6
50
43.1
41.8
41.7
41.5
55.2
38.1
38.0
37.6
30 40
%
%
36.6
47.9
46.0
34.3
30
28.6
20
20
29.8
22.0
10
21.5
10
0 0
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Product focus: Enabling customers
ISEC is focusing on enabling customers through various tools and

products that aid both new-to-market as well as sophisticated
traders in making their trades. For this, the company has also
brought in certain tools as given under:
a) Breeze API – tool for traders who write their own code with large
set of historical data.
b) Flash Trade – simpler tool for derivative traders where one can
trade directly off the chart.
c) Easy option – option trading tool where complicated financial

formula is converted into simple English.
Additionally, the company is also improving reaction times, latency,

added research, as well as working on elevating the marketing
technology stack which will measure individual client behaviour in
terms of products liked and give instant nudge.
71
Thematic Report
Distribution business – further diversification

ISEC distributes third-party products like mutual funds, insurance
and loans and earns commission on the same. The business has
scaled up well and currently contributes ~18-19% of the revenue, with
a topline of around Rs 6 bn in FY22. We summarise the business in
the below table.
Exhibit 136: ISEC’s distribution business
Segment Commission Comments
Mutual ~73-78 bps • Tied up with all major AMCs with equity dominating the mix.
Funds
• Total AUM (ex. Direct) at the end of 2QFY23 was at Rs 520 bn, out of which
equity AUM (ex. Direct) was at Rs 445 bn, contributing 85.6% of the mix.
• Market share in gross inflow terms at 0.19%
• SIP flows have increased to Rs 10 bn+, at Rs 11.9 bn in 2QFY23 with market

share of 3.15%.
Insurance 8.6% of • Insurance business is dominated by life insurance using open architecture
premium model. The company is creating an offering of GI products.
• ISEC has tied up with 6-7 partners and have also tied up with an insurance
aggregator Coverfox. Coverfox is helping to build the tech interface with
20% of new
assisted digital journey for both general and health insurance. Coverfox
business
will be the tech provider while ISEC will do the marketing on a revenue
premium
sharing model.
• The company has brought in simple products like Pre-Approved Sum

Assured (PASA).
• Premium collected in FY22 was at Rs 8 bn, with Rs 700 mn in revenue.
Loans 60-70 bps • 12 products which include home loans (largest component – 75-80%),
business loan (20-25%), gold loan, SME loan, etc.
• Total loans distributed so far is Rs 8.79 bn, out of which home loan is Rs 5.59
bn.
• ISEC distributes loans of 7-8 partners, which include ICICI Bank and other
strong partners.
• The company is trying to do deep integration with partners trying to build

a platform where customers and lenders can connect.
• Use analytics for pre-approved loans of ICICI Bank (1 mn approved).
Others – • Other products include distribution of PMS, AIF and HNI products.
• Launched proprietary PMS which has AUM of Rs 11,000 mn.
72
Thematic Report
Exhibit 137: Mutual fund revenue growth stable with consistent yields
1,200 1.0
1,000
0.8
800
0.6
Rs mn
600
%
0.4
400
0.2
200
562 556 576 570 494 571 627 694 736 867 966 937 892 953
0 0.0
Revenue (Rs million) Yield
Exhibit 138: Declining market share but SIP inflows at Rs 10 bn+ consistently
14 5.0
12
4.0
10
8 3.0
Rs bn
%
6 2.0
4
1.0
2
8.1 8.0 8.1 8.5 7.8 8.1 8.6 10.0 10.8 11.9 12.7 13.2 12.4 11.9
0 0.0
SIP Flows (Rs billion) SIP flows market share
Exhibit 139: Equity commands majority of the Exhibit 140: Equity AUM growth in line with total
share of total AUM AUM growth
90 60
Equity as % of Total AUM
50
85 40
85.6
30
84.6
83.7
80
82.9
20
81.6
10
%
78.6
75 0
76.2
75.0
(10)
74.5
74.4
74.4
74.1
73.6
73.5
70
(20)
2QFY21
2QFY22
2QFY23
1QFY21
1QFY22
1QFY23
3QFY21
3QFY22
4QFY21
4QFY22
65
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Equity AUM growth Total AUM growth
73
Thematic Report
Exhibit 141: Life Insurance premium remains Exhibit 142: Life insurance yields consistent at 8-
stable 9%
3,500 300 12
Premium
3,000 250 10
2,500 200 8
Rs mn
2,000 150 6
Rs mn
%
1,500 100 4
1,000 50 2
2,958
2,653
2,909
2,338
1,865
1,483
1,906
1,248
1,982
1,783
500
1,729
1,919
1,351
1,231
0 0
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
0
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Revenue (Rs million) Yield (%)
Exhibit 143: Loan business growing with increasing share of other loans apart from home loans
10
8
3.2
6 1.9 2.1
Rs bn
1.8 2.1
1.0
4 0.7
0.6
0.2 0.2 0.3 0.9 4.9 5.6
2 0.1 4.3 4.1 4.6 4.1
3.0 3.6
2.5 2.4 2.3 2.1 0.2 2.3
0.9
0
Home loans distributed (Rs billion) Other loans distributed (Rs billion)
Exhibit 144: Proprietary PMS showing strong growth

12
Own PMS AUM
10
8
Rs bn
6
11
4
8
7
2
5
4
3
2
2
2
1
1
1
0
0
0
74
Thematic Report
Exhibit 145: Life Insurance premium collected Exhibit 146: Distribution share in revenue mix to
has grown consistently be at 18% over FY22-25E
10,000 26
Distribution revenue 8,772 23.9 Distribution as % of revenue
7,674 24
8,000
6,704
5,996 22
6,000
Rs mn
4,131 4,202 20
%
4,000 18.0 17.8 17.8
17.4
18
16.2
2,000
16
0 14
FY20 FY21 FY22 FY23E FY24E FY25E FY20 FY21 FY22 FY23E FY24E FY25E
Channel mix – non-ICICI Bank share increasing

ISEC’s distribution strategy has changed materially with share of
ICICI Bank customers going down since adoption of open
architecture from 1QFY21 (refer Exhibit 147). Currently, 70%+ customers
are sourced outside ICICI Bank customers (with a peak of ~80%
during 3Q-4QFY22).
Exhibit 147: Non-ICICI Bank channel share going up after open architecture system
100
26 26 25 29
80 40 42
46
69 72 71
60 77 77 81 80
%
40
74 74 75 71
60 54 58
20
31 28 29
23 23 19 20
0
ICICI Bank acquired customers Non-ICICI Bank acquired customers
ISEC has tied-up with HSBC and IDFC First to offer 3-in-1 broking
service like what they have been doing with ICICI Bank. ISEC’s
customers now have their savings account connected to all the
leading banks in India (e.g. HDFC Bank, State Bank of India, Axis Bank,
Kotak Mahindra Bank).
The additional fillip in customer base has come from these channels,
although rate of acquisition from ICICI Bank has also increased with
time (around 35,000 customers per month run-rate, compared to
25,000 per month pre-pandemic).
75
Thematic Report
Institutional business
ISEC’s institutional business consists of (a) institutional broking
business and (b) investment banking business. ISEC has a very
strong footing in both the segments. We highlight the details of these
segments below:
Exhibit 148: ISEC’s institutional business
Segment FY22 revenue Comments
Institutional Rs 2,538 mn • Provides DIIs and FIIs with brokerage services, corporate access and equity
equity and research.
allied • Empaneled with a large number of institutional clients.
• Apart from brokerage income, the segment revenue also depends on revenue
sharing with investment banking from primary capital market performance.
Investment Rs 2,956 mn • Offers both equity capital markets and other financial advisory to corporate
banking clients, government and financial sponsors.
• One of the leading investment banks in terms of number of primary issuances
managed.
• Revenue depends on the deal activity in the market, for which FY22 was a
particularly strong year. In FY22, ISEC managed.
o 30 IPOs and InvITs with a market share of ~71% in terms of issue size,
o 9 QIPs with market share of 48.7% in terms of issue size.
o 2 Rights issues with market share of 83.6%.
o 2 M&A and 5 private fund raise/stake sale deals.
Exhibit 149: Expect stable growth across Exhibit 150: Investment banking revenue
institutional equity segments impacted due to tepid IPO activity
3,500 3,500
Issuer services and advisory
3,000 3,000
2,645
661 2,956
2,500 2,300
2,500
758 575
2,000 2,000
250
Rs mn
453 2,000
Rs mn
1,500 1,613
192
2,251 1,500
1,000 1,924
1,600 1,780 1,786
500 1,289 1,000 764
0 500
0
Institutional brokerage Allied revenue
76
Thematic Report
Exhibit 151: Aggressive IPO activity over the last two years
1,400 70
58
1,200 60
47
1,000 50
No. of deals
800 34 40
Rs bn
600 25 30
17
400 14 20
200 10
282 889 227 227 798 1,297
0 0
Offer Amount (Rs bn) No. of deals
Exhibit 152: Tepid IPO activity impacting the deal Exhibit 153: Market share in issuer and advisory
pipeline consistent in the range of 65-70%
1,400 80 84
63 67 78.0 Mobilization Market share
1,200 79
54
1,000 60
42 74 70.0
No. of deals
800 68.0
Rs bn
40 69 66.0 66.0
600 28
22
64
%
400 20 58.0
10
200 59
178 437 1,214 850 879 825 542
52.0
0 0 54
2QFY22
2QFY23
1QFY22
1QFY23
3QFY22
4QFY22
4QFY21
49
44
Value of IPO Pipeline 4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23
77
Thematic Report
Private Wealth Management: A franchise in the making

A perfect recipe of growing customer base, product offerings and
execution
ISEC has created a horizontal segment consisting of clients whose

AUM with ISEC was more than Rs 10 mn. This segment now has
evolved into a strong franchise in our view and has total AUM of Rs
3.1 trn at the end of 2QFY23 – the largest in the country. The company
has 71,217 customers at end-2QFY23 with ~1,500 client additions
during the quarter. The run-rate for the last few quarters has been
1,500-3,000 clients. ISEC has around 350k customers who are close to
the Rs 10 mn threshold and could aid in strong growth for this
segment.
Exhibit 154: Private wealth AUM growing with increasing number of clients
3,500
Total AUM 3,100
3,000 2,828 2,858 2,777
2,486
2,500
2,009
Rs bn
2,000 1,677
1,473
1,500
1,153
988 999 1,019 997
1,000 832
500
0
Exhibit 155: Wealth management clients reach 70,000+

80,000
70,000 71,217
Wealth management clients 68,000
70,000 65,140
61,850
60,000 54,900
47,400
50,000
40,000
30,000
20,000
10,000
0
4QFY21 1QFY22 2QFY22 3QFY22 4QFY22 1QFY23 2QFY23
78
Thematic Report
Diversified model with recurring share going up
ISEC classifies the revenue coming from this cross-section of clients

under ‘recurring revenue’ (which includes SIPs, life insurance,
subscription charges, etc. – i.e. stickier income) and ‘transactional
revenue’ (like broking, general insurance, lumpsum MF inflows, etc.).
We find it encouraging that market volatility notwithstanding, ISEC’s
share of recurring revenue in overall private wealth revenues are
going up, indicating better quality income. It has gone up in the 60%
range over the last four quarters, compared to the 50% level earlier.
Yields for this segment has also started to inch upwards as we show
in below Exhibits.
Exhibit 156: Recurring revenue increasing Exhibit 157: Recurring revenue yields inch up
aggressively while transactional yields are stable
3,000 2.0
2,500
1.5
994
1,047
1,006
2,000
788
1,047
Rs mn
1,500 1.0
914
%
786
1,000
1,637
581 557
1,542
1,498
1,512
491 520
0.5
1,270
4QFY20 460406
1QFY21 370405
3QFY20 378233
905
500
2QFY20 319224
1QFY20 356215
794
0 0.0
2QFY20
2QFY21
2QFY22
2QFY23
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY21
3QFY22
4QFY21
4QFY22
2QFY22
2QFY23
2QFY21
1QFY22
1QFY23
3QFY22
3QFY21
4QFY22
4QFY21
Recurring revenue Transactional revenue Recurring yield Transactional yield
Better cost absorption
We believe that scale-up in this segment is leading to better cost

absorption and is reflecting in improving cost to income ratios –
from 67% in FY20 to 45% in FY22. ISEC has ~400 wealth managers for
this 71k customers. Further, ISEC is also able to cross-sell products,
with 1.19 mn customer having more than one product of ISEC.
79
Thematic Report
Exhibit 158: Cost-to-income declining with Exhibit 159: Consistent improvement in cross
private wealth scaling up selling capabilities of ISEC
70 1.4
67.0 Customer traded in 2 or more products
Wealth Management CI Ratio 1.2
65
1.0
60
0.8
mn
54.0
55 0.6
%
0.4
50
45.0 0.2
0.88
0.95
0.99
0.93
0.87
0.97
1.05
0.91
1.09
1.02
1.15
1.19
1.12
1.17
45
0.0
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
40
FY20 FY21 FY22
The wealth segment is now contributing around 25-30% of the retail

revenue and we expect the share of this segment to go up. This
would further be aided by propositions like own PMS (which has now
Rs 10.9 bn in assets at end-2QFY23) for HNIs.
Exhibit 160: Private wealth contribution to retail Exhibit 161: PMS AUM shows aggressive growth at
revenue on a rising trend Rs 11 bn
3,000 40 12
35.0
33.3
35.9
33.9
33.6
Own PMS AUM 11.0

29.0
25.9
2,500 10
30
20.5
21.3
2,000 7.8
18.5
8 7.2
17.4
16.6
16.5
16.0
Rs mn
1,500 20
%
Rs bn
6
1,000 4.5
10 3.7
2,589
2,285
1,580
2,518
2,631
4
2,317
1,818
2.9
1,010
866
1,137
543
500
570
775
611
2.2
0 0 2 1.1 1.1 1.3 1.6 1.7
0.1 0.5
2QFY20
2QFY21
2QFY22
2QFY23
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY21
3QFY22
4QFY21
4QFY22
0
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Private Wealth Revenue

Private Wealth as % of retail revenue
80
Thematic Report
Cost base has become more variable

ISEC’s cost base has become more variable with time. While in
1QFY20, fixed cost was 72% of cost base, it has reduced gradually and
has come down below 50% in 2QFY23 (around Rs 2,266 mn), with
variable costs at 51% of the cost mix in the last quarter (around Rs
2,355 mn).
Exhibit 162: Cost split gradually coming down to 50-50 between variable and fixed costs
5,000
4,000
2,266
1,835
1,858
2,062
1,851
3,000
Rs mn
1,688
1,609
1,788
1,665
1,678
2,000
1,626
1,663
1,687
1,627
2,534
2,463
2,355
2,215
2,005
1,000
1,622
1,295
1,371
1,205
1,028
996
656
633
713
0
Variable Cost Fixed Cost
Exhibit 163: Gross cost-to-income ratio Exhibit 164: Net cost-to-income ratio elevated
expanded with lower revenue generation due to lower revenue
60 60
56.8
56.4
56.3
Cost to Income Ratio (Net)
55.5
Cost to Income Ratio (Gross)
55.3
53.9
53.6
53.4
53.3
52.7
55
52.9
51.0
50.0
55
51.7
48.1
49.7
50
44.9
44.8
47.6
50
43.6
43.3
%
%
45.9
46.1
45.5
45
40.9
39.8
43.1
45
41.5
40
35 40
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
2QFY20
2QFY22
2QFY23
2QFY21
1QFY20
1QFY22
1QFY23
3QFY20
1QFY21
4QFY20
3QFY22
3QFY21
4QFY22
4QFY21
Source: Company, B&K Research. Note: Net C/I excludes interest income and interest expense.
Cost-to-income levels have mean-reverted on income slack
At a company level, cost-to-income ratio was at 54% in 1HFY23

(slightly elevated given the lower revenue generation in current
market conditions). Management aspires to reach a 40% cost-to-
income level by FY25. Management has highlighted that while they
will be judicious in spending, they do not want to compromise on
growth opportunities.
81
Thematic Report
Capex spends moderated and deferred partly
However, given the current market scenario, ISEC has moderated

spending on technology and spread the technology costs over six-
seven quarters compared to earlier four quarters (at the start of
FY23, the management expected to see 2.5x increase in FY23 capex
over the Rs 600-700 mn capex done in FY22 – which in itself was a
70% YoY increase).
82
Thematic Report
Expect both Revenue and PAT to clock 13% CAGR over FY22-
25E
Revenue growth to be driven by allied revenues
We expect ISEC’s revenue to compound by 13% over FY22-25E. Bulk of

the growth is expected to come from prime fees and other fees and
charges, while retail brokerage revenue growth is estimated in high
single-digit given the strong base of FY22.
Exhibit 165: Revenue growth likely to decline but stabilise at 13% CAGR over FY22-25E
60
Revenue growth
50
51.6
40
30
32.5 32.8
20
%
10 18.7 16.7
0
4.7
0.1
(10)
(8.4)
(20)
FY18 FY19 FY20 FY21 FY22 FY23E FY24E FY25E
Exhibit 166: Bulk of the revenue growth to come from prime and other fees
150
Growth Expectations - Segment wise
138.4
100
51.3
50 34.7 28.2 22.7
%
26.9
19.1 18.8 21.9 19.2 25.0 18.8 16.7 19.3 20.0 16.5
(16.8) (19.8)
(50)
FY23E FY24E FY25E
Equity Brokerage Derivative Brokerage MTF Prime Fees Other fees Institutional business
In retail brokerage, we expect the derivative brokerage business to

clock mid-20s growth rate while cash segment growth is expected
to be muted.
In terms of the distribution business, we expect it to grow at mid-

teens rate, largely driven by mutual funds and life insurance.
Institution business might see slower growth during this period due
to a very high base of FY22. However, after a muted performance in
FY23, we expect growth to pick-up strongly in normalised market
conditions.
83
Thematic Report
Margins to remain stable, PAT to see 13% CAGR over FY22-25E
Our estimates highlight slight increase in margins for ISEC over FY22-
25E, resulting in a 13% CAGR in PAT over the period. In our model, we
factor in the share of variable costs increasing in the cost structure
resulting in an improvement in cost to income ratio of ~47% in FY25E.
Exhibit 167: Operating margin likely to remain Exhibit 168: Share of variable cost likely to
stable over FY22-25E increase in the cost structure
70 25,000
Operating Margin Cost Split
60 20,000
7,883
50 58.3 56.8 7,883
55.0 56.2
52.8 15,000 7,558
Rs mn
40 47.2 48.0 7,233
45.8
10,000
%
38.9
30 6,688 15,404
6,654 12,729
5,000 10,616
20 8,625
4,867
3,030
10 0
0
Variable Cost Fixed Cost
Exhibit 169: Cost/Income to decline on the back Exhibit 170: PAT likely to grow at 13% CAGR over
of increasing variable cost FY22-25E
60 25,000
Cost to income PAT
19,811
50 55.1 20,000
52.2 16,476
49.3
40 47.3 46.9
45.4 13,826
15,000
Rs mn
13,285
10,677
30
%
10,000
20 5,535
4,907
5,000 5,456
3,317
10
0
0
FY20
FY22
FY21
FY25E
FY23E
FY17
FY18
FY19
FY24E
Source: Company, B&K Research. Note: C/I excludes interest income and interest expense.
84
Thematic Report
Initiate coverage with a Buy recommendation

We initiate coverage on ICICI Securities with a Buy recommendation
on the stock. The stock is currently trading at 9.8x/8.3x its FY24/25E
earnings. Our 3-stage DCF-based model values ISEC at 12.6x/10.7x
FY24/25E earnings, with a target price of Rs 680.

We highlight our valuation assumptions in Exhibit 171. As we see in

Exhibit 172, in comparison to its historical trading range, ISEC is
trading significantly below its historical P/E multiple range, close to 1
std below average.
Exhibit 172: Historical trading multiples (One-year forward P/E)

29
24
19
14
4
Jan-22
Apr-18
Apr-19
Oct-20
Nov-22
Dec-19
Nov-20
Jan-21
Oct-21
Feb-20
Mar-20
Mar-22
May-20
Jun-20
Aug-20
Jul-21
Jun-22
Aug-22
Sep-22
Oct-18
Jan-19
Feb-21
Nov-18
Oct-19
May-21
Sep-21
Apr-22
Jul-18
Aug-18
Mar-19
Apr-21
May-18
Jun-19
Jul-19
Sep-19
Dec-21
85
Thematic Report
Exhibit 173: ISEC’s management profile
with ICICI Group for 27+ years. prior served as the Executive
Director on the Board of ICICI Bank. On the Expert Panel of ICICI
Prudential AMC – Real Estate Business. Member of SEBI’s
Mr Vijay Chandok MD & CEO Secondary Markets Advisory Committee, Co-Chair of FICCI’s
Capital Market Committee, member of CII National
Committee on Financial Markets and CII’s Mutual Funds
Advisory Board.
Executive Director and 25 years of experience and associated with the company for
Head – Corporate over eight years. Worked with ICICI Bank Ltd. in corporate
Mr Ajay Saraf
Finance & Institutional banking and SME banking verticals. Prior to ICICI Bank Ltd., he
equity worked with American Express Bank Ltd.
20+ years of experience and associated with the company

Mr Harvinder Jaspal CFO for over five years. Worked as CFO at ICICI Pru Life Insurance.
Graduate of IIM Lucknow.
25+ years of experience, worked as CTO for IIFL Group, as a CIO

Mr Subhash Kelkar CTO
with Mahindra Holidays.
Head - Retail Equity &

Mr Vishal Gulechha
Acquisition
Head – Retail
Mr Kedar Deshpande
Distribution & Products
Head – Private Wealth,

Mr Anupam Guha
Assets & PMS
Head – New Solutions

Mr Ketan Karkhanis
Group
86
Thematic Report
ICICI Securities

Year ended 31 Mar (Rs mn) FY22 FY23E FY24E FY25E Year ended 31 Mar FY22 FY23E FY24E FY25E
Total Income Product mix (%)
- Interest Income 7,185 9,220 10,776 12,611 Retail broking 40 32 32 32
- brokerage income 15,526 13,227 15,630 18,435 Interest income from lending 14 16 17 17
book
- Income from services 11,020 12,616 15,071 17,574
Subscription and other 4 7 8 8
Net gain on fair value chg. 589 900 1,200 1,200
charges
Total Revenue from oper. 34,350 35,977 42,690 49,834 Distribution 17 19 18 18
Other income 35 – – – Institutional business 16 11 11 11
Total income 34,385 35,977 42,690 49,834 Others 8 14 14 13
Growth (%) 33.0 4.6 18.7 16.7 Total 100 100 100 100
Finance costs 2,737 3,913 4,666 5,564 Equity ADTO (Rs bn) 46 39 45 52
Fees and commission exp. 1,666 1,419 1,677 1,978 Derivative ADTO (Rs bn) 1,063 1,914 2,201 2,532
Impairment on financial (69) 70 70 70 Retail equity and allied revenue
instruments Retail brokerage 13,746 11,441 13,705 16,185
Operating expense 1,140 1,359 1,485 1,623 Allied revenue 6,382 8,596 10,451 12,620
Employee benefits expenses 6,644 7,475 8,222 9,044 - o/w Interest on lending book 4,980 5,934 7,075 8,438
Depreciation, amoritisation 625 700 735 772 (MTF, etc.)
and impairment - o/w Prime Fees 779 1,178 1,473 1,767
Other expenses 3,115 3,238 3,757 4,236 - o/w Other fees and charges 622 1,484 1,903 2,414
Total expenses 15,857 18,174 20,611 23,287 Total 20,128 20,036 24,156 28,804
Growth (%) 37.2 14.6 13.4 13.0 Retail Equity ADTO (Rs bn) 37 31 37 45
PBT 18,528 17,803 22,079 26,548 Retail Derivative ADTO (Rs bn) 1,039 1,870 2,431 3,038
Growth (%) 29.5 (3.9) 24.0 20.2 Institutional equity and allied revenue
Tax 4,702 4,518 5,603 6,737 Institutional brokerage 1,780 1,786 1,924 2,251
PAT 13,826 13,285 16,476 19,811 Allied revenue 758 250 575 661
Growth (%) 29.5 (3.9) 24.0 20.2 Total 2,538 2,036 2,499 2,912
Institutional Equity ADTO (Rs bn) 9 8 10 11
Balance Sheet Institutional Derivative ADTO 25 30 35 41
(Rs bn)
Year ended 31 Mar (Rs mn) FY22 FY23E FY24E FY25E
Distribution revenue
Total Financial Liabilities 105,753 104,675 99,836 95,287
Mutual Fund 3505 3966 4587 5300
Total Non-Financial Liab. 6,404 6,504 6,504 6,504 Life Insurance 701 858 1019 1197
-Equity Share Capital 1,613 1,613 1,613 1,613 Other distribution 1790 1880 2115 2379
-Other Equity 22,692 27,342 33,108 40,042 Total 5,996 6,704 7,721 8,877
Total Equity 24,305 28,955 34,722 41,656 Mutual Funds
Total Liabilities 136,462 140,134 141,062 143,446 Equity AUM ex direct (Rs bn) 421 484 557 641
Total AUM ex direct (Rs bn) 503 554 623 701
-Cash and Cash Equivalents 56,166 57,000 57,000 57,000
Profitability ratios (%)
-Receivables 3,848 3,079 2,463 1,970
Operating margin 56.8 52.8 55.0 56.2
-Securities for trade 2,430 3,645 5,468 8,202
PAT margin 40.2 36.9 38.6 39.8
-loans 68,567 68,567 68,567 68,567
RoE 65.0 49.9 51.7 51.9
-Investments 107 107 107 107 Valuations ratios (x)
-Other Financial Assets 1,136 3,529 3,250 3,393 EPS 42.8 41.2 51.1 61.4
Total Financial Assets 132,255 135,927 136,854 139,239 P/E 14.5 12.8 10.3 8.6
Non-Financial Assets 4,207 4,207 4,207 4,207 BVPS 56.5 75.3 89.7 107.6
P/B 11.0 7.0 5.9 4.9
Total Assets 136,462 140,134 141,062 143,446
87
Thematic Report
Initiating Coverage Central Depository Services (India)

Hold Options value galore
Share Data Central Depository Services (India) Ltd. (CDSL) operates in a
Market Cap. Rs 128.1 bn (US$ 1,568 mn)
duopoly market with a diverse mix of revenues with optionalities
Price Rs 1,226
from regulatory impetus related to digitisation in the securities
Target Price Rs 1,071
and financial products markets. While CDSL’s current revenue
BSE Sensex 62,505
momentum reflect market cycle, future diversification
Reuters CDSL.BO
Bloomberg CDSL IN
opportunities may arise. CDSL’s current valuation multiples are
6M avg. daily turnover (US$ mn) 8.9 quite rich compared to the growth possibilities in the medium-
52-week High/Low (Rs) 1,734/1,015 term. We forecast 16%/15% CAGR in Revenue/PAT over the next
Issued Shares 105 mn three years and initiate coverage with a Hold recommendation
Valuation Ratios with a target price of Rs 1,071, valuing CDSL at an implied multiple
Year to 31 Mar FY23E FY24E FY25E of 27.8x FY24E EPS based on our DCF model.
EPS (Rs) 28.0 38.5 45.5 Regulatory impetus in insurance space would aid earnings
+/- (%) (6.2) 37.7 18.2
PER (x) 43.8 31.8 26.9 A near-term optionality for CDSL remains in dematerialisation of
PBV (x) 9.0 7.0 5.6 insurance policies that the insurance regulator has proposed. While
Dividend Yield (%) 1.1 1.6 1.9 this will occur in phases, depositories stand to benefit from this,
Shareholding Pattern (%) although price points for such services remain unclear at this
moment. Further, mandatory e-KYC would aid CDSL’s subsidiary
Promoters 20
FIIs 16
engaged in the same business, and already has shown strong growth
MFs 7 from regulatory support in the KYC space. Further progress and clarity
BFSI's 12 regarding this should be sentimentally positive for the stock.
Public & Others 45 Core earnings partly secular and partly market linked
CDSL’s core income from custody fees charged to corporates
2,000
whose securities are dematerialised are fairly secular in nature
1,500
and is expected to grow. However, transaction-based income
1,000
(which includes IPOs) depends on market volumes and expected
500
to remain tepid compared to last year. We are factoring in 12-13%
0
growth in overall revenue till FY25E.
Dec-19
Nov-20
Nov-22
Feb-20
Jul-20
Nov-21
Sep-20
Feb-21
Jul-21
Feb-22
Jun-22
Sep-22
Apr-20
Sep-21
Apr-21
Apr-22
Expenditures remain elevated – a drag on PAT CAGR

CDSL (Actual)
Sensex (Rebased) CDSL’s core expenditures are IT capex and talent costs. The costs
are expected to remain high and drag PAT CAGR given that the
Company needs to address – (a) skill in the IT side in management
heavy and complex database and infrastructure for depositories;
and (b) regulatory role in the stock market as CDSL grows. We
factor in 15% CAGR in PAT till FY25.
PAT 3,118 2,925 4,026 4,759
EBITDA margin (%) 66.5 60.9 66.1 67.4
Return on equity (%) 30.3 22.8 24.7 23.0
88
Thematic Report
Option values galore

CDSL, a depository in a duopoly market, is a play on the domestic
capital market growth. While CDSL’s base business’s topline has a
direct impact coming from all the activities in the capital market –
like transactions, IPOs, corporate action as well as maintenance
charges to different corporate account holders and clearing
members – option values arise out of areas of regulatory impetus –
like centralised KYC registration, insurance dematerialisation
among others.
CDSL’s structure highlights the same as shown in Exhibit 174.
Exhibit 174: CDSL’s group structure
Company name Business overview Stake in subsidiary

Central Depository Services The company facilitates holding and transacting in all types of
(India) Ltd. (CDSL) securities in electronic form and facilitates settlement of trades
done on stock exchanges. Currently, it is the largest depository in
India in terms of number of demat accounts opened.
CDSL Ventures Ltd. (CVL) The company is registered as a KYC Registration Agency (KRA) 100%
and acts as a repository for KYC for investors in the capital
markets including the mutual fund industry. It also provides RTA
services, GST return filing services, Aadhaar-based eKYC, eSign
services, accredited investor services, claim repository for PMJJBY
scheme, etc.
CDSL Insurance Repository Ltd. The company is in the business of enabling policyholders to hold 51% (Direct Holding)
(CIRL) life policies, motor policies and health policies in electronic form. and 3.25% (through
Policy holders can undertake changes, modifications, and subsidiaries)
revisions in the insurance policy with speed and accuracy. It has
arrangements with 22 life insurance companies and 19 general
insurance companies.
CDSL Commodity Repository The company was established to run a commodity repository on 52%
Ltd. (CCRL) the lines of a security depository. It exclusively serves MCX, BSE and
ICEX for their derivative trades in agri-commodities.
89
Thematic Report
Dominating market share in incremental accounts

CDSL has close to three-fourths of India’s demat accounts
With 104.4 mn demat accounts in India at the end of October 2022,

CDSL continues to maintain its market leadership. At the end of
October, CDSL’s market share further improves slightly to 72% (versus
71% in the previous month), CDSL’s number of demat accounts
currently stands at 74.8 mn at the end of October.
Exhibit 175: Total demat accounts in India Exhibit 176: CDSL maintains its market
crossed 100 mn+ in FY23 leadership in terms of demat accounts
80 80
Demat Accounts Market Share - Demat Accounts
60 60
mn
40 40
%
20 20
63.0
33.4
29.6
74.8
26.7
18.5
14.8
14.6
10.8
15.6
12.3
21.2
17.4
19.7
21.7
17.1
0 0
FY16 FY17 FY18 FY19 FY20 FY21 FY22 1HFY23 FY16 FY17 FY18 FY19 FY20 FY21 FY22 1HFY23
NSDL CDSL NSDL CDSL
Source: Company, NSDL, B&K Research
Incremental market share even higher
At the end of October, CDSL had an 82% market share in incremental

demat accounts opened, which was a slight improvement
compared to the share in the previous month. However, recent slack
in new demat accounts have also reflected in CDSL’s pace in adding
new accounts.
Exhibit 177: FY22 witnessed opening of 300 mn+ Exhibit 178: CDSL aggressively adding new
demat accounts accounts with 80%+ market share
40 100
Incremental Demat Accounts Market Share - Incremental Demat Accounts
80
30
60
mn
20
%
40
10
5.0
20
12.2
11.8
2.9
2.0
29.6
1.5
1.4
1.2
1.0
3.8
2.6
2.5
1.5
0 0
FY17 FY18 FY19 FY20 FY21 FY22 1HFY23 FY17 FY18 FY19 FY20 FY21 FY22 1HFY23
NSDL CDSL NSDL CDSL
Source: Company, NSDL, B&K Research
90
Thematic Report
Tie-ups with new-age brokers have aided growth

CDSL’s growth in market share has been aided by tie-ups with
discount brokers (e.g. Zerodha, Angel One, Groww) who have seen
strong growth in terms of customer base in the last few years. As
some of these DP entities of these new-age brokers work exclusively
with CDSL, we expect the pace of customer base growth to improve
going ahead as market conditions normalise.
Exhibit 179: CDSL’s demat accounts growth aligned with strong growth of top discount brokers
8.0 80
CDSL Accounts and Top Broker 67.2 68.5 69.9 71.7 73.4 74.8
63.0 65.0
Active Clients
6.0 60
33.4
mn
mn
4.0 40
21.2
14.8 17.4
2.0 20
6.4
6.6
6.6
6.6
6.6
4.4
6.5
4.5
0.5
0.8
0.0
0.0
0.0
5.0
0.6
0.4
0.4
4.9
0.9
6.3
4.3
3.8
3.8
3.6
3.9
4.2
4.2
4.7
6.7
3.7
4.1
4.1
4.1
1.4
1.6
4
0.0 0
FY18 FY19 FY20 FY21 FY22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22
Zerodha Groww Angel One CDSL Demat Accounts
Source: Company, NSE, B&K Research
Exhibit 180: All Top 10 brokers registered as DP with CDSL; exclusive tie-ups with top discount brokers
Broker Name CDSL NSDL

Zerodha 
Grow 
Upstox  
Angel One 
ICICI Securities  
5Paisa 
HDFC Securities  
Kotak Securities  
IIFL Securities  
MOSFL  
91
Thematic Report
Diversified revenue sources immunes CDSL partly from

capital market volatility
CDSL (or any depository for that matter) have multiple
counterparties who translate into revenue sources. These
counterparties for the depository business include:
a) Corporates both listed and unlisted who have their securities

dematerialised.
b) Depository participants (DPs) who are intermediaries that

connect depositories with the end customer – Beneficial owner
(BO).
In the below exhibit, we highlight various charges that CDSL levy on

these entities. These rates are determined by SEBI in most cases and
hence are mostly uniform between CDSL and NSDL.
Exhibit 181: CDSL’s major revenue sources in the depository business
Charged to Under the % contribution Comments

head to consolidated
revenue in FY22
Corporate Annual Issuer 18 • Charged at an annual basis which is higher of the

charges following – (a) Rs 11 per folio based on average number
of folios held during the previous financial year (b) a
slab-based rate which takes into account the capital
structure of the corporate.
Corporate 10 • Charged at Rs 10 per ISIN per credit.

action
DP Transaction 33 • Rs 5.50-Rs 4.25 based on transaction volume.

charges
Additionally, CDSL has further diversification in its revenues through

various other sources in its subsidiary businesses. Further, there are
potential other revenue sources as we had highlighted in previous
section.
Exhibit 182: CDSL’s major revenue from subsidiaries
Charged to Under the % contribution Comments

head to consolidated
revenue in FY22
Intermediary KYC charges 21 • Charged at Rs 20 per record creation and at Rs 35 per

fetching of order.
92
Thematic Report
Leadership in DP network has bolstered growth

CDSL has a large depository network
Depository participants (DPs) are the key intermediary between a

depository and the end client – the beneficial owner (BO). Number of
DPs for CDSL is almost double of NSDL (at 581 as of October 2022
versus 279 for NSDL). The company is directly connected to DPs
through a centralised database systems resulting in a cost
advantage and enabling DPs to provide real-time services to
investors at competitive pricing.
BO accounts largely individual customer driven
CDSL’s BOs have a high share of individual accounts (~99.8%). Out of

the total 74.7 mn demat accounts, corporates were only 70.5k
account in October 2022 (although contributing 50% to the value of
equity securities, 46% of debt securities and 8% in mutual funds). This
is quite in contrast to NSDL’s mix.
Exhibit 183: Number of BOs have reached more than ~2x of FY21 numbers
80
Number of BOs - CDSL
70 74.7
60
62.9
50
mn
40
30
33.4
20
21.1
10 17.3
14.8
10.8 12.2
0
Exhibit 184: Individual clients command a mammoth 99.8% share of BO accounts

BO mix - October 2022
0.2%
Individual
Corporate and Others
99.8%
93
Thematic Report
Exhibit 185: Corporate BOs contribute close to ~50% with respect to equity demat value
Equity Demat Value Mix
0.9% 0.9%
Individual
Mutual Funds
41.1%
Bank
Corporate
Trusts
49.8%
NRI
3.3%
4.0%
DPs are key drivers of business
Generally, BOs are agnostic to account being opened at which

depository. It is basically driven by which DP a BO is using for opening
the account. Hence, CDSL focuses on maintaining a strong network
of DPs. The network is quite mature and stable as most DPs eligible
are already on the network and incremental additions are minimal
in nature.
While CDSL does not charge anything to the BO, it charges the DP on
the debit side of a traction at a slab-based rate (refer Exhibit 190).
This is referred to as transaction charges and is a significant source
of CDSL’s topline.
Hence, CDSL’s revenue model related to transaction charges is

dependent on the success and business growth of the underlying
DP. This has been one of the factors that have played out in the last
few years as we have seen CDSL’s tie-ups with the discount brokers
aiding growth.
CDSL’s management highlight that efforts in helping and hand

holding depository participants have borne fruit and improved
competitive advantage. CDSL has several solutions on the fintech
side which the company offered to new players coming in. Further,
the shift to digital during the Covid-19 period and CDSL’s role in
helping DPs go digital has helped significantly. CDSL has the required
IT building blocks in place to aid DPs increase their DP businesses
seamlessly.
94
Thematic Report
Exhibit 186: Strong growth in transaction Exhibit 187: Transaction charges off 4QFY22 peak
charges over FY21-22 due to weak market environment
2,500 600
Transaction charges Transaction charges 497 527 527
1,995 500 443
2,000 410 420
400 371
305 310
Rs mn
1,500 300
1,191
Rs mn
206
200
1,000 127
99 92 112
100
440 393 429
500 312
0
Q2FY23
Q3FY20
Q4FY20
Q3FY22
Q3FY21
Q4FY22
Q4FY21
Q2FY20
Q2FY22
Q2FY21
Q1FY20
Q1FY22
Q1FY23
Q1FY21
0
Transaction charges are significant share of CDSL’s topline
To elucidate, transaction charges were 30-33% of CDSL’s consolidated

revenue for FY21/22. While this is on the higher side given the higher
market activity in the last two years, in a normalised scenario, we
expect it to be in the range of 20-25%. CDSL’s charges (at a range of Rs
5.50-4.25 per transaction based on volumes – higher the volume
lower the unit charges) are slightly higher than that of NSDL (at Rs 5.00
flat rate). Management believes that CDSL’s service quality has
enabled the customer stickiness rather than pricing.
Exhibit 188: Strong growth in cash turnover with increasing number of demat accounts
200,000
Cash Turnover
150,000
Rs bn
100,000
50,000
164,430
179,045
46,824
60,542
96,597
34,784
87,246
33,302
51,845
55,168
85,231
38,521
83,178
32,571
49,771
0
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 1HFY23
Source: Company, NSE, BSE, B&K Research
95
Thematic Report
Exhibit 189: Growth in transaction charges in line with strong cash turnover growth
2500 200,000
164,430 179,045
2000
150,000
1500 96,597
87,246
Rs bn
Rs bn
83,178 85,231 100,000
1000 60,542
50,000
500
312 440 393 429 1,191 1,995 840
0 0
FY17 FY18 FY19 FY20 FY21 FY22 1HFY23
Transaction charges Cash Turnover
Source: Company, NSE, BSE, B&K Research
Exhibit 190: Expect slight de-growth in transaction charges after strong FY21 and FY22
Monthly transaction bill amount Rate per debit transaction (Rs)
Less than Rs 100,000 5.50
Rs 100,000 to Rs 400,000 5.00
Rs 400,000 to Rs 1,500,000 4.50
More than Rs 1,500,000 4.25

Exhibit 191: Slight decline in number of DPs but Exhibit 192: Transaction charges off 4QFY22 peak
consistent at 580+ due to weak market environment
605 600
CDSL DPs Transaction charges 497 527 527
599
600 597 500 443
410 420
595 593 400 371
592
305 310
Rs mn
590 588 300

206
584 200
585 583
127
581 99 92 112
580 100
0
575
Q2FY23
Q3FY20
Q4FY20
Q3FY22
Q3FY21
Q4FY22
Q4FY21
Q2FY20
Q2FY22
Q2FY21
Q1FY20
Q1FY22
Q1FY23
Q1FY21
570
Transaction charges to moderate before taking-off again
As we show in Exhibit 193, transaction charges have a decent

correlation with the activity in the market. As we move into 2HFY23,
we expect better transaction volumes than we saw in 1HFY23 and
expect slight tapering in transaction charges in FY23 versus FY22.
96
Thematic Report
Exhibit 193: Expect slight de-growth in transaction charges after strong FY21 and FY22
2,500
Transaction charges 2,160
1,995 2,010
2,000
1,748
1,500
1,191
Rs mn
1,000
440 393 429

500 312
0
97
Thematic Report
Corporates contribute large portion of revenue pool which is

more structural
Demat for wide spectrum of securities
CDSL offers dematerialisation for a diverse set of securities (like

equity shares, preference shares, government and corporate bonds,
commercial papers, certificates of deposits and units of mutual
funds). For this, the company charges account maintenances
charges to corporate accountholders, which are referred to as
‘Annual Issuer Charges’. Apart from listed corporates, unlisted
players are also required to get enlisted with a depository if there is
any corporate action (as per a rule by MCA).
Number of issuers have grown at low-to-mid teens rate
The number of issuers at CDSL has grown at a steady rate of 12-18%

at CDSL over the last four years. However, interestingly, CDSL has a
lower market share in terms of number of issuers. This is possibly
because of a previously more competitive structure that NSDL had
in terms of issuer charges.
Exhibit 194: Number of issuers growing at a Exhibit 195: Market share lower in terms of
steady rate number of issuers; stable at 33%
25,000 40
Number of issuers
38
20,000
36
15,000
%
34
10,000
32
5,000
16,464
19,406
18,268
10,628
14,762
30
12,757
9,887
10,021

0
CDSL market share - number of issuers
CDSL has a dedicated relationship manager allotted to a group of

companies in order to maintain the service level and accordingly
work out the corporate specific requirements.
Unlisted corporates share is gradually increasing
As per a directive by Ministry of Corporate Affairs (MCA) in 2018,

unlisted companies, while having any corporate action, needs to get
it done in dematerialised form. However, unlike listed corporates,
unlisted companies do not have any necessity or compulsion to go
to both the depositories. As we see in Exhibit 195, CDSL’s share in
incremental companies added are increasing gradually – from
26.7% in FY18 to 35.7% in FY22 and 36.1% in 1HFY23. Opportunities in the
unlisted space remains significant, in our view.
98
Thematic Report
Exhibit 196: Incremental market share increases gradually to 35%+ in terms of number of issuers
40
Market share - Incremental number of issuers
30
20
%
10
(10)
FY17 FY18 FY19 FY20 FY21 FY22 YTDFY23
Annual charges are regulator driven
Annual charges for issuers are driven by SEBI approved rate that
CDSL charges to the companies. The charge for a year is the higher
of Rs 11 per folio in the previous year and that is based on a slab that
factors in the size of the share capital of the issuer (refer Exhibit 197).
The current charges were last approved by SEBI in 2015 and
historically these charges have been approved by SEBI after every
five years.
Exhibit 197: Charges to issuers for NSDL/CDSL
Issued and Paid-up capital Annual Custody Fee
Up to Rs 25 mn Rs 5,000 + GST (18%)
Above Rs 25 mn and up to Rs 50 mn Rs 9,000 + GST (18%)
Above Rs 200 mn Rs 75,000 + GST (18%
Annual charges are a critical proportion of CDSL’s consolidated

revenue, contributing another 20-25% in normalised scenario. We
highlight this in Exhibit 202.
99
Thematic Report
Exhibit 198: Transaction charges contributing Exhibit 199: Contribution of transaction charges
~33% to revenue in FY22 declining sequentially
35 40
Transaction Charges as % of revenue
Transaction Charges as % of revenue
35
30
30
25 25
20 20
%
%
15
15
10
10 5
5 0
Q2FY23
Q3FY20
Q4FY20
Q3FY22
Q3FY21
Q4FY22
Q4FY21
Q2FY20
Q2FY22
Q2FY21
Q1FY20
Q1FY22
Q1FY23
Q1FY21
0
Fairly stable revenue generation for issuer fees
Unlike CDSL’s other revenue streams, this segment’s revenue general

has been more secular historically. We expect the growth in number
of issuers to increase in early-to-mid teens in the next three years
given the base effect. We expect issuer fees to increase steadily over
the next three years as shown in the Exhibit below.
Exhibit 200: Rise in number of issuers and issuer fees to increase annual issuer charges
3,000
Annual issuer charges 2,559
2,500
2,195
1,884
2,000
Rs mn
1,500
1,154
1,000 775 861

672
481 517 556
500
0
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23E FY24E FY25E
IPO and corporate action charges are more market driven
While for CDSL, IPO related charges will have an impact of the market
sentiments – which would be a key variable driving the number of
IPOs, share splits, bonuses, etc. The charges are Rs 10 per credit in the
portfolio. Owing to this, we expect FY23 to be a tepid year for this
segment, and to gain a steady state growth post that subject to
normalised market conditions.
100
Thematic Report
Exhibit 201: Tepid IPO activity to impact growth in FY23

700
IPO/ Corporate Action
600 661
605
500 575
500
400
Rs mn
300
329
295
200
226
199
100 165
0
101
Thematic Report
We expect CDSL’s standalone revenues to grow in early-to-

mid teens
CDSL’s standalone revenue mix has a fair share of both cyclical and
relatively structural revenue pools, which had historically led to
strong revenue momentum during exuberant market conditions
and high (generally) single-digit growths during the down cycle.
Exhibit 202: Standalone revenue mix with a fair share of both cyclical and structural revenue pools
8,000
Standalone revenue break-up
6,000
Rs mn
4,000
2,000
0
Transaction charges IPO/ Corporate Action Annual issuer charges CAS Charges
Investment Income Other operating income Other income Dividend from CVL
We expect that over FY23-25, growth to be in early teens, particularly

due to the impact of weak markets in FY23. We model a 15% CAGR in
topline for the standalone business over FY22-25E.
Exhibit 203: Standalone revenue to grow at 15% CAGR over FY22-25E in our view
8,000 60
54.0
7,000 47.8
50
6,000
40
5,000
Rs mn
4,000 30
%
3,000 17.9
12.7 14.4 20
12.2 11.9
2,000
6.8
10
1,000
1,566 1,672 1,885 2,114 3,123 4,809 5,503 6,160 7,263
0 0
Standalone revenue Growth
102
Thematic Report
CDSL Ventures: A high growth segment

CDSL Ventures Ltd. (CVL) is a 100% subsidiary of CDSL which is a KYC
Registration Agency. With a view to have uniform KYC requirements
for securities markets, SEBI had mandated the same for all SEBI
registered intermediaries.
Vintage leading to strong market share
CVL has (as of end-FY22) registered 2097 intermediaries and holds

total 43 mn records. This was a significant growth from 28 mn
records held at the end of FY21. We highlight the growth in the below
exhibit. CVL due to its vintage in the space has a sizeable market
share.
Exhibit 204: KYC records witness strong growth in FY22

50 60
CVL KYC records 53
50
40
40
30
mn
30
30
%
20
15 20
11 10
10 8
10
14.3 15.4 17.1 18.8 21.6 28.1 43
0 0
Flat charges in two legs
The KRA business model has charges in two legs. For record creation,
the company charges Rs 20 for uploading KYC into KRA. And for
fetching of the record, the charge is Rs 35 per fetch.
Other activities – RTA, PMJJBY
CVL also provides RTA services to unlisted companies, which started

from November 2018. As of end-FY22, the company has over 840
unlisted companies in this segment. Further, CVL works with 11 life
insurance companies to eliminate multiple claims by same entity in
PMJJBY.
Expect CVL revenue to grow strongly
We expect CVL revenue to maintain growth momentum given

increasing financialisation as well as digitisation in the financial
product space. We estimate a 27% CAGR over FY22-25E in ‘Online
data charges’ in CDSL financials reflecting CVL’s revenue growth. CVL
also pays dividend to CDSL, which was Rs 235 mn and Rs 420 mn in
FY22 and FY23E, respectively.
103
Thematic Report
Exhibit 205: Expecting online data charges to grow at ~27% CAGR over FY22-25E
3,000
Online data charges
2,433
2,500
2,000 1,872
Rs mn
1,500
1,200
900
1,000
562
500 292 317 368
187
0
We expect CDSL’s consolidated revenue to grow at 16% CAGR over

FY22-25E.
Exhibit 206: Expecting consolidated revenue to witness consistent growth momentum

10,000
Consolidated revenue
9,351
8,000
8,052
6,000
6,309
Rs mn
6,059
4,000
4,006
2,000 2,842
2,257 2,438
1,613 1,869
0
104
Thematic Report
Business models that can scale-up with regulatory impetus:

Insurance repository
Insurance regulator IRDAI had long on its agenda the
dematerialisation of insurance policies. However, a recent draft
guideline highlights the focus on the same, with proposals to have
e-insurance policies issued for all new policies when the guidelines
come into effect along with a timeline of 12 months for existing
insurance policies. Given that India has almost 450-500 mn in-force
policies, we believe this could be a significant opportunity for
Insurance Repositories (IRs).
Currently, India has four repositories:
• NSDL National Insurance Repository.
• CDSL Insurance Repository Limited (Subsidiary of CDSL).
• Karvy Insurance Repository Limited.
• CAMS Insurance Repository Services Limited.
CDSL Insurance Repository (CIR)
While the opportunity remains significantly under-penetrated, IRDAI

making insurance dematerialisation mandatory could enable
strong growth, in our view. CIR had 0.71 mn active electronic
insurance accounts (eIAs) at the end of FY22, a growth of 18% YoY
compared to end-FY21. Additionally, there was over 0.56 mn
electronic policies credit to these accounts in FY22, an increase of
33%. However, topline reduced by 19% YoY indicating a fall in
realisation.
It could be possible that unit pricing may come down significantly

as insurance dematerialisation becomes mandatory, but the sheer
volume of incremental policies to be dematerialised would be the
key growth enabler. Given that details related to this are yet to be
finally announced by the regulator, we have not included this in our
estimates, but view these developments as significant value creator
once finalised.
Exhibit 207: Growth momentum in e-insurance accounts continues

800
Active electronic insurance accounts 711
700
603
600 550
514
500
in '000
400 355
321
300
200
100
0
105
Thematic Report
Exhibit 208: Revenue from operations down Exhibit 209: PAT remains below pre-Covid levels;
from peak but consistent other income key tailwind
5 25
CIRL - Revenue CIRL - PAT
4.5 19.9
3.8 20
4 3.6 3.5 17.6
16.3
3 15 13.5
Rs mn
Rs mn
10.1 10.5
2 1.7 10
1.0
1 5
0 0
FY17 FY18 FY19 FY20 FY21 FY22 FY17 FY18 FY19 FY20 FY21 FY22
Exhibit 210: No. of policies increasing Exhibit 211: Tie-ups with most of the life insurers;
consistently; life insurance contributes highest general insurers tie-ups increasing
25
FY22 Tie-ups with insurers
522 2 35
20
FY21 400 1 21
15
FY20 307 0 10
in '000
FY19 228 0 8 10
FY18 86 0 2 5
Number of electronic policies
FY17 65 22 15 22 18 22 20 22 20 22 19
0
0 100 200 300 400 500 600 FY18 FY19 FY20 FY21 FY22
Life Insurance Motor insurance Health insurance Life insurers General insurers
Additional opportunities lie in front of bullion/gold depositories and

account aggregator businesses; however, this would depend on
how regulations shape up in these areas and how business scale-
up.
106
Thematic Report
Operating margins to normalise due to high technology

capex and employee expenditure – PAT CAGR at 15% over
FY22-25E
CDSL’s EBITDA margins have expanded over FY16-22 from 52% to 67%,
respectively. This has been due to strong growth in the last two years
and consequent operating leverage play-out.
Exhibit 212: Expansion in EBITDA margins owing to strong growth and operating leverage
70
EBITDA Margin
60 66.5
61.6
59.5
50 56.0
54.2
51.9
40
%
39.6
30
20
10
0
Going ahead, we expect the margins to normalise slightly to around

64% over FY22-25E. This is due to the following factors on the cost
side:
a) Employee expenses: Management has clearly iterated the need

to focus on the right talent as CDSL grows. While management
had guided 12-15% growth in employee expenses, we forecast a
higher rate of growth in the near term driven by team size
augmentation and compensation escalations.
o Tech talent: Being a technology driven company it will

continue to invest in the right set of people.
o Regulatory focus: Having a larger regulatory responsibility,

CDSL also needs to get appropriate talent.
107
Thematic Report
Exhibit 213: Need for top tech talent and compensation increases to act as headwinds
1,200
Employee benefits expense
960
1,000
853
758
800
Rs mn
600 506
473
413
400 342
303
215 249
200
0
b) Technology capex: CDSL needs to maintain its strength in terms

of depository and database levels systems that need heavy
usage of database and processing capabilities. While these are
unique capabilities that aid incremental opportunities (like IFSC
depository), there remains need of consistent expenditure on the
technology side.
Exhibit 214: Growth of tech related expenses to be consistent to have unique capabilities
600
Computer Technology related expenses
497
500
415
400 345
Rs mn
300 276
193
200 154
116
97
100
0
FY18 FY19 FY20 FY21 FY22 FY23E FY24E FY25E
c) Fees to regulator: CDSL pays some fees to SEBI, which includes

5% of its operating profit being contributed to the investor
protection fund as well as share of issuer fees. This will continue
to increase with growth in business and profitability.
PAT to clock 15% CAGR over FY22-25E
We expect CDSL’s PAT to clock a CAGR of 15% over FY22-25E and

expect a PAT margin of 50-54% over this period, compared to higher
PAT margins over FY21-22. We expect CDSL to continue paying 60% of
its profits as dividend.
108
Thematic Report
Exhibit 215: PAT growth to stabilise; expecting ~15% CAGR over FY22-25E
5,000
PAT
4,759
4,000
4,026
3,000
3,118
Rsmn
2,925
2,000
2,013
1,000
1,036 1,148 1,067
911 866
0
Exhibit 216: Strong RoE expansion in FY21 and FY22

30
RoE
23.9
25
19.6
20
14.9 15.7 15.6
15 12.7
%
10
0
109
Thematic Report
Initiate coverage with a Hold recommendation

We initiate coverage on CDSL with a Hold recommendation. The
stock is currently trading at 31.7x/26.8x its FY24/25E earnings, which
appears expensive in our opinion. Our 3-stage DCF-based model
values CDSL at 28.8x/24.4x FY24/25E earnings, with a target price of
Rs 1,071.

In coming up with our valuation model, we have taken growth

assumptions to reflect growth that may emanate from regulatory
changes in the insurance space (i.e. mandatory dematerialisation)
and strong performance of its KRA subsidiary (which has a
significant moat in our view with 60-65% market share). We highlight
our valuation assumptions in Exhibit 217. As we see in Exhibit 218, in
comparison to its historical trading range, while CDSL’s valuations
have cooled-off to an extent, it still trades at 1 std above average.
Exhibit 218: CDSL’s historical trading multiples

72
62
52
42
32
22
12
2
Apr-18
Apr-19
Oct-20
Jan-22
Dec-18
Nov-20
Jan-21
Dec-19
Oct-21
Feb-20
Mar-20
Jul-20
Aug-20
Mar-22
May-20
Mar-21
Jan-18
Oct-18
Jan-19
Nov-19
Jun-21
Jul-21
May-22
Jun-22
Aug-22
Nov-22
Sep-22
Sep-21
Jul-18
Mar-19
Apr-21
Feb-18
May-18
Sep-18
Jun-19
Aug-19
Sep-19
Dec-21
110
Thematic Report
Exhibit 219: Management profiles

Mr Nehal Vora Managing Director and Chief 20+ years of experience, worked as Chief
Executive Officer Regulatory Officer of BSE and the member of the
Executive Leadership Team.
Mr Girish Amesara Chief Financial Officer
Mr Amit Mahajan Chief Technology Officer 25+ years of experience, worked as Senior
General Manager of BSE Ltd.
Mrs Nayana Ovalekar Chief Regulatory Officer 30+ years of experience, worked as Officer
on Special Duty of Stock Holding Corporation of
India Ltd.
Mr Ramkumar Chief of Business Development,
Krishnan Operations and New Projects
Mr Vinay Madan Chief Risk Officer
Mr Nilay Shah Group Company Secretary &
Head Legal
111
Thematic Report
Central Depository Services (India)

Yr ended 31 Mar (Rs mn) FY22 FY23E FY24E FY25E Yr ended 31 Mar FY22 FY23E FY24E FY25E
Total Income
Revenue Breakup (%) - Consolidated
- Revenue From Operations 5,513 5,809 7,527 8,799
Transaction charges 32.9 27.7 25.0 23.1
-Other Income 546 500 525 551
Total income 6,059 6,309 8,052 9,351 IPO/ Corporate Action 10.0 7.9 7.1 7.1
Growth (%) 51.2 4.1 27.6 16.1 Annual issuer charges 19.0 29.9 27.3 27.4
Employee benefits expense 506 758 853 960
Investment Income 7.7 9.2 8.0 7.5
Depreciation and
115 189 208 229
amortisation expense Online data charges 19.8 14.3 23.2 26.0
Computer Technology
276 345 415 497 CAS Charges 2.7 3.1 2.9 3.0
related expenses
Other expenses 1,063 1,169 1,286 1,415 Other operation income 6.6 6.6 5.4 4.9
Total expenses 1,959 2,463 2,763 3,102
Other income 1.3 1.3 1.1 1.0
Growth (%) 38.9 25.7 12.2 12.3
Total 100 100 100 100
PBT 4,085 3,832 5,275 6,235
Growth (%) 57.4 (6.2) 37.7 18.2 Revenue Breakup (Rs mn) – (Consolidated)
Tax 967 907 1,249 1,476 Transaction charges 1,995 1,748 2,010 2,160
PAT 3,118 2,925 4,026 4,759
IPO/ Corporate Action 605 500 575 661
Growth (%) 54.9 (6.2) 37.7 18.2
Annual issuer charges 1,154 1,884 2,195 2,559
Balance Sheet
Investment Income 466 583 641 705
Share Capital 1,045 1,045 1,045 1,045 Online data charges 1,200 900 1,872 2,433
Other Equity 9,884 12,809 16,835 21,594 CAS Charges 162 195 234 281
Non-Controlling Interests 434 434 434 434
Other operation income 397 417 438 459
Total Equity 11,363 14,288 18,314 23,073
Non-Current Liabilities 136 136 136 136 Other income 79 83 88 92
Current Liabilities 1,757 1,757 1,757 1,757 Total 6,059 6,309 8,052 9,351
Trade Payables 124 124 124 124
Annual issuer charges rate 65,859 95,543 100,321 105,337
Other financial liabilities 1,209 1,209 1,209 1,209
Other Current Liabilities 422 422 422 422 Cash volume (Rs bn) 164,430 179,045 174,753 200,966
Total Equity and Liabilities 13,256 16,180 20,206 24,965 Profitability ratios (%)
Non-Current Assets 4,182 4,182 4,182 4,182
EBITDA Margin 66.5 60.9 66.1 67.4
PPE & Other Intangible assets 1,100 1,100 1,100 1,100
Investment in associates 191 191 191 191 PAT margin 56.6 50.3 53.5 54.1
Other Investments 2,668 2,668 2,668 2,668 RoE 30.3 22.8 24.7 23.0
Other assets 223 223 223 223
Valuations ratios
Current Assets 9,073 11,998 16,024 20,783
Investments 6,396 6,523 7,045 7,750 EPS 29.8 28.0 38.5 45.5
Trade Receivables 458 458 458 458 P/E 49.4 43.8 31.8 26.9
Cash and cash equivalents 2,059 4,855 8,359 12,414
BVPS 108.7 136.7 175.3 220.8
Other Current Assets 161 161 161 161
Total Assets 13,256 16,180 20,206 24,965 P/B 13.5 9.0 7.0 5.6
112
Thematic Report
Annexure
113
Thematic Report
Not Rated 5paisa Capital

Share Data 5paisa Capital Limited (5paisa) started as a discount broker in
Market Cap. Rs 9.5 bn (US$ 248 mn) 2016 and was listed on the exchanges post demerger from IIFL
Price Rs 660 Holdings in FY17. Fairfax, through its Mauritius subsidiary, holds 25%
BSE Sensex 62,505
in 5paisa, while promoters own 33% as of September 2022. The
Reuters PAIS.BO
company offers a wide range of financial products & services
Bloomberg 5PAISA IN
which include online discounted stock broking, research and
distribution of mutual funds, peer-to-peer lending, among others.
Issued Shares 31 mn
Among top 10 players with increasing client base
Performance (%) 1m 3m 12m
Absolute (3) (14) (28) As on October 2022, 5Paisa is the 6th largest broker as per active
Relative (8) (19) (34) client base, having market share of 3.7%. Total client base of
company stood at 3.2 mn, out of which active clients were 1.3 mn,
Shareholding Pattern (%)
as on September 2022. Average client funding book for 2QFY23
Promoters 33
stood at Rs 2,462 mn (although down 16% YoY), with a granular mix
FIIs 24
(94% book having less than Rs 50k ticket size).
Public & Others 43
Focus on product development
1,500 As the company focuses on DIY traders, they are focusing on
1,000
enhancing features in mobile app and website that benefits
traders. 5paisa recently launched a product called FNO360 for
500
derivative traders. Features like Margin Plus to the product, One-
0
tap rollover, Quick reverse were launched in this quarter.
Dec-19
Nov-20
Nov-22
Feb-20
Jul-20
Nov-21
Sep-20
Feb-21
Jul-21
Feb-22
Jun-22
Sep-22
Apr-20
Sep-21
Apr-21
Apr-22
Cost control supporting PAT, revenue diversified

5Paisa (Actual) During FY22, revenue grew by 53% to Rs 2,980 mn. However, PAT de-
Sensex (Rebased) grew by 6% at Rs 137 mn due to heavier cost structure. 5paisa has
managed to reduce its customer acquisition cost (36%
improvement in 2QFY23 sequentially to Rs 574) which resulted in
achieving highest ever quarterly profit. The company’s revenue
source remains fairly diversified, with broking income contributing
around 40-45%, broking allied revenue around 32-38% and cross-
sell revenue at 6-7% over the last few quarters.
Key financials
(Rs mn) FY18 FY19 FY20 FY21 FY22
Revenue 197 608 1,083 1,946 2,980
PAT (253) (190) (79) 147 137
Active clients (’000) 38 117 434 870 1,754
Total clients (’000) 61 191 542 1,353 2,739
(Rs mn) 1HFY21 2HFY21 1HFY22 2HFY22 1HFY23
Total ADTO 317,040 489,595 693,040 10,94,860 15,29,625
Average client
1,408 1,457 2,585 3,418 2,815
funding Book
114
Thematic Report
Not Rated IIFL Securities

Share Data Incorporated in 1996 as a broking arm of the IIFL Group, IIFL
Market Cap. Rs 20.9 bn (US$ 256 mn)
Securities (IIFLSec) provides retail and institutional equities,
Price Rs 69
financial products distribution, commodity broking, currency
BSE Sensex 62,505
broking, investment banking, financial planning and wealth
Reuters IIFS.BO
Bloomberg IIFLSEC IN management services to retail and institutional customers across
6M avg. daily turnover (US$ mn) 0.2 India. The company has three revenue streams – (a) retail broking
Issued Shares 304 mn targeted at affluent tech savvy customers; where IIFLSec also
Performance (%) 1m 3m 12m offers mutual funds, insurance and PMS in an open architecture
Absolute 1 (5) (22) model, (b) institutional broking and (c) investment banking.
Relative (3) (10) (28)
Retail broking market share has gone up in the last year
Shareholding Pattern (%)
In terms of NSE active clients, IIFLSec’s market share currently
Promoters 31
FIIs 17
stands at 3.0%. During 2QFY23, the company has acquired 0.15 mn
BFSI's 3 customers with active client base as on October 2022, stood at

Public & Others 49 0.92 mn. The rate of customer acquisitions have flattened in line
Promoters 31 with trends we are seeing in the market. ADTO levels in F&O
Relative performance continue to increase sequentially, while cash ADTOs continue
150 stabilise. Retail broking revenue for 1HFY23 has gone up by 21% YoY.
100 Distribution and investment banking stable

50
Distribution business show trends of stabilisation with 1HFY23
0 revenue at Rs 949 mn. In investment banking, the company has
Dec-19
Nov-20
Feb-20
Jul-20
Nov-21
Nov-22
Sep-20
Feb-21
Jul-21
Feb-22
Jun-22
Sep-22
Apr-20
Sep-21
Apr-21
Apr-22
undertaken 6 transactions and filed 6 DRHPs in 2QFY23. Pipeline

remains strong. Revenue at Rs 548 mn in 1HFY23, was up 6.4% YoY.
IIFL Sec (Actual)
Sensex (Rebased) Recorded strong growth on the back of bull-run
During FY22, the company has reported revenue of Rs 13,164 mn, a

growth of 52% YoY. On a 3-year CAGR basis, revenue grew by 15%.
Brokerage income constitutes >50% of total income, registering a
growth of 35% YoY, at 6,467 mn. PAT reported a robust growth of
39%, at Rs 3,058 mn in FY22.
Key financials
Brokerage & rel. inc. 5,141 5,048 4,452 4,991 6,747
Total revenue 9,472 8,756 7,899 8,676 13,164
PAT 1,806 1,714 2,339 2,203 3,058
Customer acq. (’000) 63.8 88.5 150 378 783
Active clients (mn) 0.23 0.21 0.22 0.29 1.13
Cash ADTO (Rs bn) 11.5 11.6 12.05 17.4 18
F&O ADTO (Rs bn) 128.4 165.5 187.5 278.1 770
115
Thematic Report
HDFC Securities Not Rated

Incorporated in 2000, HDFC Securities Ltd. (HSL) is one of the leading
full-service stockbrokers in India. The company has a customer
base of 3.83 mn to whom it offers investment and protection
products.
HSL offers investments and direct trading services, along with

currency derivatives, mutual funds, NCDs, fixed deposits, bonds,
basket investing, global investing, PMS/AIF and more – to suit the
diverse investment needs of customers. HSL specialises in asset
allocation, portfolio structuring and realignment, and goal-based
investing.
Focus on digitisation
HSL has consolidated its branch network with 216 branches across
147 cities/towns. The company has also created digital Boarding
Journeys which has resulted in 50% customers being onboarded
digitally. 91% of HSL’s customers accessed the services digitally.
Third largest traditional broker in term of active client base
During FY18-22, client base of the company grew by 17% CAGR, from
0.6 mn to 1.2 mn. As on October 2022, the company has active client
base of 1.16 mn.
Revenue growth was strong in the upcycle
During FY22, the company reported revenue of Rs 19,903 mn, a

growth of 42% YoY. On a 3-year CAGR basis, revenue grew by 37%.
Out of the total revenue, brokerage income constitutes more than
70%, registering a growth of 24% YoY/29% 3-year CAGR, at Rs 14,090
mn. PAT of the company was Rs 9,843 mn, growth of 40% YoY. The
average size of Margin Trading Funding Book stood at Rs 29,920 mn
in FY22, registering growth of 2.21x YoY. The book size was at Rs 32,280
mn at the end of the year.
Key financials
Brokerage and fees income 7,080 6,520 6,880 11,400 14,090

Total Revenue 7,880 7,710 8,623 13,994 19,903
PAT 3,440 3,300 3,842 7,032 9,843
Avg. Margin Funding Book NA NA 5,440 9,320 29,920
Active clients (mn) 0.65 0.71 0.75 1.01 1.23
Total client base (mn) NA 2.14 2.41 2.73 3.83
116
Thematic Report
Zerodha Not Rated

Founded in 2010, Zerodha is India's largest broker (in terms of active
clients) offering online flat fee discount brokerage services to invest
in Equity, Currency, Commodity, IPO and Direct Mutual Funds.
Zerodha focuses on customers who are into trading and has
developed its tools and platforms to suit the customer needs
(Trading software – Kite through mobile and web). The company
also offers direct mutual funds through its investment platform
Coin. Zerodha in 2021 received in-principle approval from SEBI to set
up an asset management company (AMC) and is now awaiting a
final nod from the markets regulator.
Strong growth since FY18
Zerodha’s active client base has seen humongous growth since

FY18. While the company had 0.17 mn clients in FY17, it moved up to
0.54 mn in FY18 and currently stands at 6.64 mn. Zerodha has seen
benefit of its discount broking model owing to an early mover
advantage. During FY22, the company has acquired 2.68 mn active
customers, a growth of 74% YoY. The company ranks 1st in NSE active
clients, having market share of 18%. Zerodha has 10 mn+ customers
and contributes 15% of India’s retail trading volume.
Bootstrapped and lean on marketing expenditure
Zerodha has been boostrapped by its founders; however, Zerodha’s

management had highlighted that they value the company at US$
2 bn for ESOP buyback exercise.
Zerodha has also not invested in marketing expenditure in its

history. This has aided the profitability of the company in an
industry which is known for high customer acquisition costs.
Highest revenue and PAT among brokers

growth of 58% YoY. On a 3-year CAGR basis revenue grew by 5x. PAT
reported a robust growth of 60% during FY22, at Rs 18,000 mn.
Key financials
(Rs mn) FY19 FY20 FY21 FY22

Revenue 208 9,385 27,289 43,000
PAT 183 4,240 11,223 18,000
Active clients (mn) 0.9 1.4 3.6 6.3
117
Thematic Report
RKSV Securities Not Rated

Incorporated in 2010, RKSV Securities (Upstox) is a tech-first low-
cost broking firm in India providing trading services at discounted
prices. The company provides trading on different segments such
as equities, commodities, currency, futures, options which are
available on its Upstox Pro Web and Upstox Pro Mobile trading
platforms.
Upstox’s – Unicorn with a renowned investor base
Upstox is backed by a group of investors including Tiger Global,

Kalaari Capital and Ratan Tata and has recently undertaken fund-
raise at a US$ 3.5 bn.
Strong growth in customer base in the last bull run
During FY22, Upstox’s active customer base increased by 3.07 mn

customers, a growth of 1.4x YoY. The company ranks 3rd in NSE
active clients with base of 4.4 mn as on October 2022. The company
has recently crossed 10 mn users. Digital infrastructure in India has
been a key enabler for growth in the early stages for Upstox.
Upstox’s customer base see sizeable contribution from new-to-

market millennials from Tier 2/3 cities
Millennials form 50% of Upstox’s customer base, while 85%+

customers are from Tier 2/3 cities along with 70% of customers
being first-time investors. These metrics are similar to what we
have seen in recent acquisition trends in discount broking model.
Maharashtra, Uttar Pradesh, Madhya Pradesh, Rajasthan and
Assam are Upstox’s key markets.
Revenue grew by 2x, losses widen by 88% YoY
During FY21, the company reported revenue of Rs 4,291 mn, a growth

of 2x YoY. On a 3-year CAGR basis, revenue grew by 1.6x. The
company is yet to be profitable at the PAT level and reported a loss
of Rs 717 mn in FY21 (versus 380 mn in FY20).
Key financials
Revenue 252 734 1,480 4,291
PAT 20 131 (380) (717)
Active clients (mn) 0.04 0.10 0.62 2.14
118
Thematic Report
NextBillion Technologies Not Rated

NextBillion Technologies (Groww) had originally started as a direct
mutual fund distribution platform. However, in 2020, Groww moved
into stockbroking using the discount broking model and also
launched digital gold, ETFs, etc.
Unicorn backed by marquee investors
Groww is backed by marquee investors like Tiger Global, Sequoia,

Ribbit Capital, Iconiq, and Mr Satya Nadella among others. Groww’s
fundraise (in October 2021) from Iconiq catapulted its valuation to
US$ 3 bn.
One of the fastest growing investment platform
During FY22, the company has acquired 3.07 mn customers, a

growth of 4x YoY. The company ranks 2nd in NSE active clients with
base of 4.98 mn as on October 2022. The company has 14% market
share in active client base, within span of three years.
Focusing on growing its product suite
In FY22, Groww acquired Indiabulls AMC for Rs 1.75 bn. This should
help the company move into the mutual fund segment in the
future. As per media reports, Groww plans to expand its product
suite and also will focus on talent quality.
New entrant with robust growth in revenue and PAT

growth of 7.6x YoY. On a 3-year CAGR basis, revenue grew by 16.5x.
Profit of the company grew by 1.5x YoY to Rs 68 mn. The company
has turned profitable in FY21.
Key financials
Revenue 0.7 2.9 404.1 3,480
PAT (2.4) (79.4) 27.3 68
Active clients (mn) – – 0.8 3.9
119
Thematic Report
Not Rated Motilal Oswal Financial Services

Share Data Motilal Oswal Financial Services (MOFSL) is a diversified financial
Market Cap. Rs 97.5 bn (US$ 1,196 mn) services company offering Retail broking & Distribution, Institutional
Price Rs 660 Equities, Private equity, Private Wealth Management, Investment
BSE Sensex 62,505 Banking, Asset Management and Home finance. It has a diversified
Reuters MOFS.BO
client base that includes retail customers (including High Net worth
Bloomberg MOFS IN
Individuals) mutual funds foreign institutional investors financial
institutions and corporate clients.
52-week High/Low (Rs) 1,015/652
Issued Shares 148 mn Capital markets business
Performance (%) 1m 3m 12m The company has presence in over 2,500+ locations across 550
Absolute (3) (14) (28) cities with 3.2 mn registered customers. Active client has registered
Relative (8) (19) (34) 26% growth at 0.91 mn as of September 2022. 82% of new clients
Shareholding Pattern (%) acquired from Tier I & II cities. Cash ADTO for 2QFY23 stood at Rs 25
Promoters 70 bn, while F&O ADTO stood at Rs 2,187 bn with overall ADTO at Rs 2,212
FIIs 9 bn (up 45%) with a market share of 3.4%, up 50 bps QoQ.
MFs 5 MOFSL’s broking and distribution ARPU came in at Rs 24k in 1HFY23,
Public & Others 16 which was slightly lower compared to FY22. Historically, ARPU has
Promoters 70 been at Rs 26-28k range. In IB, revenue growth was strong due to 3
Relative performance marquee deals. Funding book was at Rs 29.2 bn, up 39% YoY.
1,400
1,200 MOFSL has total assets under management of Rs 936 bn in 2QFY23,
1,000
800
where net yield in 2QFY23 improved slightly to 75 bps. Yield on
600 distribution assets (at AUM of Rs 186 bn) also improved slightly
400
200 sequentially to 55 bps, during the quarter.
0
On the other hand, costs increased due to addition of 1,300
Dec-19
Nov-20
Nov-22
Feb-20
Jul-20
Nov-21
Sep-20
Feb-21
Jul-21
Feb-22
Jun-22
Sep-22
Apr-20
Sep-21
Apr-21
Apr-22
employees in advisory and technology functions.

Motil Oswal Fin (Actual)
Revenue growth remains strong
Sensex (Rebased)
During the FY22, the company reported revenue of Rs 43,200 mn, a
growth of 19% YoY/12% 4-year CAGR. Profit of the company grew by
9% YoY to Rs 13,110 mn. In 1HFY23, capital markets business grew by
19% YoY/11% YoY in terms of operating profit/PAT, respectively.
Key financials
(Rs mn) FY17 FY18 FY19 FY20 FY21 FY22

Cap markets 7,311 11,558 10,833 11,352 15,990 23,760
revenue
Total Revenue 19,240 27,520 24,620 23,650 36,340 43,200
PAT 3,650 6,230 2,850 2,150 12,030 13,110
Active clients
(mn) 0.2 0.3 0.3 0.4 0.6 0.9
Total clients
(mn) – – 1.2 1.5 2.0 2.9
Cash ADTO 11 16 15 19 29 31
F&O ADTO 74 121 159 216 411 846
120
Thematic Report
National Securities Depository Not Rated

National Securities Depository Ltd. (NSDL) was established in August
1996 after enactment of Depositories Act, 1996 and is one of the two
players in the depository industry of India. It provides a bouquet of
basic services like account maintenance, dematerialisation,
market transfer, transmission, etc. along with value-added services
like e-Voting, CAS, dividend distribution, etc. to investors,
stockbrokers, custodians and issuer companies through its
nationwide network of DPs.
Significant presence in unlisted space but market share low in

terms of client accounts
As on 31 October 2022, NSDL has 29.6 mn active client accounts,

reflecting 28% market share. Share in incremental accounts;
however, has tapered to 18%, possibly because a large portion of
NSDL’s depository participants (DPs) are traditional brokers. The
depository has a network of 279 DP and coverage of 39,494
companies, which has a high share of unlisted companies.
Since NSDL started earlier than CDSL, the company had seen good
traction in terms of onboarding corporate clients. Hence, NSDL has
around 148k non-individual clients in its active clients. Nevertheless,
resident individuals comprise 97% of the Beneficial Owner mix.
Growth in expenses impacted PAT in FY22
NSDL reported revenue at Rs 7,611 mn in FY22, reflecting a strong 25%

CAGR over FY17-22. Market share in terms of revenue has
consistently been in the range of 58-60%, possibly owing to higher
number of live companies. Total expenses in FY22 grew by 95% YoY
to Rs 5,417 mn. PAT was reported at Rs 2,126 mn which grew at a
CAGR of 16% over FY17-22.
Key financials
(Rs mn) FY17 FY18 FY19 FY20 FY21 FY22
Revenue 2,521 2,633 2,915 3,261 4,658 7,611

PAT 1,000 1,058 1,109 1,248 1,886 2,126
Demat
15.6 17.1 18.5 19.7 21.7 26.7
accounts (mn)
DPs 264 276 277 279 276 277
Issuers 17,835 19,865 25,233 30,335 34,225 37,478
121
Thematic Report
B&K Universe Profile – by AMFI Definition
140
120
120
no. of companies
100 86
80 72
60
40
20
0
Top 100 Next 150 Residual
(Large Cap) (Mid Cap) (Small Cap)
B&K Securities is the trading name of Batlivala & Karani Securities India Pvt. Ltd.
B&K Investment Ratings
LARGE CAP (Market Cap > USD 2 bn) MID & SMALL CAP (Market Cap < USD 2 bn)
BUY >+15% >+20%
HOLD +15% to -10 % +20% to -15 %
SELL <-10% <-15%
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Thematic Report
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THEMATIC

Thematic Report | Capital Market | 28 November 2022

• Brokers and depositories are a direct play on retail participation on

• As we go ahead, we should see top stockbrokers morph into

• The de-coupling (even partly) from market cycles should warrant

• For depositories, diversification of revenue pool opportunities

• While depositories will continue to directly benefit from expansion

Index Page No.

Investing technology and tech employees 21

Thoughts on valuation of stockbrokers 25

Depositories – unique play on capital market activity 27

Regulatory impetus leads to option value 30

Company Section 32-112

Central Depository Services (India) 88

5paisa Capital 114

IIFL Securities 115

HDFC Securities 116

RKSV Securities 118

NextBillion Technologies 119

Motilal Oswal Financial Services 120

National Securities Depository 121

Calm after the storm – time to focus on the structural story

The financialisation of savings of Indians, which accelerated FY17

The financialisation as the theme can be played through multiple

Exhibit 1: Financialisation of savings in India received a boost in FY21

Household Net financial savings as % GDP Household Physical Savings as % GDP

Source: RBI, B&K Research

Source: RBI, B&K Research

Exhibit 4: Derivative ADTO continues to see

The bull-run also brought in several new to market customers from

Exhibit 5: Demat accounts in India reach 100 mn+

Source: NSDL, CDSL, B&K Research

The pace of demat account additions have normalised to an extent

Source: NSDL, CDSL, B&K Research

1.5 1.7 1.7

Source: CDSL, NSDL, B&K Research

1.16 0.54 0.26

Source: NSE, B&K Research

Structural story to continue

We also observe recovery in metrics like average daily traded

Average Daily Trading Volume 35,000

ATS - BSE ATS - NSE

Source: NSE, BSE, B&K Research

Participation in equity markets remain shallow in India

Compared to global levels, India’s participation in stock markets

Investors/ Total Population

India - Total 7.5

Source: Media Reports, CDSL, NSDL, NSE, B&K Research

Source: NSE, BSE, B&K Research

Discount brokers have capitalised well in terms of

FY21-22 has been a dream run for discount brokers as they

Source: NSE, B&K Research

Source: NSE, B&K Research

Revenue model of discount brokers insulate from cyclicality

Discount brokers have a perceived advantage over traditional

Type of ICICI I- Prepaid ICICIDirect Prime Basic Power Ultra

Rs 2,500 - 0.25% Rs 299 (Annual) - 0.27%

Rs 2,500 - 0.025% Rs 299 (Annual) - 0.027%

Source: Company websites, B&K Research

We observe that a per-order revenue model is less cyclical

Nifty 50 % Change % Change in NSE Total trades

Source: Angel One Investor Presentation, B&K Research

Nifty 50 % Change % change in incremental demat accounts