Online brokerage 5paisa Capital is focusing on increasing business from existing customers rather than chasing account openings as subdued trading activity in the futures and options (F&O) segment continues to weigh on the brokerage industry.
The company reported a 14 per cent year-on-year rise in revenue to ₹88.4 crore for the June quarter, while profit after tax came in at ₹11.4 crore. Its customer base stood at 52.6 lakh.
Management said market volatility and lower trading activity led to a moderation in growth during the quarter, but said that customer engagement and funding balances continued to improve.
“Our average client funding book… increased 10 per cent quarter-on-quarter to ₹422 crore. This basically represents that it is not just user acquisition, but also wallet deepening that we are focused on,” Managing Director and CEO Gaurav Seth said during the earnings call.
Mutual fund assets under management rose 18 per cent sequentially to ₹2,073 crore, indicating that more customers are using the platform for investments beyond trading.
“There was a little bit of moderation because of the volatility… We expect growth to accelerate from the current base,” Seth said.
The comments come at a time when the online brokerage industry is grappling with lower derivatives volumes after regulatory measures introduced last year reduced speculative trading in the F&O segment. Several listed brokers have have seen pressure on trading activity and transaction revenues in recent quarters.
The company said it is deploying capital raised through its ₹468-crore rights issue to strengthen the business. Of the proceeds, ₹227 crore has been used to meet higher exchange margin requirements, ₹150 crore to repay borrowings and ₹88 crore for general corporate purposes.
Going forward, 5paisa plans to expand its margin funding products, increase the number of stocks covered under its funding offerings and roll out a revamped trading platform over the next few months.
The company would continue evaluating inorganic opportunities, although it ruled out any immediate plans to enter third-party financial product distribution. Seth said the company’s focus over the next year would be on improving user engagement, monetising new product features and driving operating leverage, with incremental growth coming at limited additional cost.