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Stock market witnessed a fresh lot of participants during the pandemic with the help of digital broking players that provided an opportunity for trading in equities to a newer population beyond big cities.

Domestic stock broking firm Angel Broking recorded 4.12 million clients by March 2021, the highest ever growth in gross client addition. The company’s net profit more-than-doubled in the fourth quarter while revenue also witnessed a significant growth. It is among largest retail broking houses in India in terms of active clients base on the NSE.

In an interview, Angel Broking’s MD and Chairman Dinesh Thakkar spoke about the growth drivers, how Covid has changed the broking industry, the company’s plans to foray into mutual funds business and more.

What has been the growth driver in the last year? What type of new investors have you seen coming into the market?

From last 3-4 years, we started focusing more on acquiring customers through digital mode. We started closing our physical networks and invested heavily on digital space to go 100% digital on B2C front. Post covid, we saw a big rush in millennials who wanted to participate in the stock market as options were available in the market from digital brokers, they preferred investing through their phones, especially acted as an opportunity for tier 2 and tier 3 cities during the lockdown period.

In our last quarter, almost 90% of our customers came from tier 2 and tier 3 cities. This is a new market which has opened up can be served by digital players who have user friendly platforms.

75% of customers are acquired by digital players in the digital broking space, while we have around 19-20% of market share in new customer acquisitions. So overall, we see a place of having a good market share in the future.

How has covid changed the broking industry?

Covid has accelerated this growth of investors coming to the market through digital platform. What started as a wave during covid, has become a fundamental trend for Indians beyond tier-1 cities who have now have the opportunity to participate in the market. It has also benefitted in terms of creating awareness across all geographies. Post lockdown period may also create surplus as savings for people who would be interested into investing in stock markets.

Past 10 years were challenging for the broking industry as there was low participation in terms of people coming into the market. CDSL growth during that period was in single digit. Now it seems like we have entered into a phase where we can see a secular growth of investors coming into the market.

Investors are showing confidence reason being investing in traditional risk-free options like bank FDs hardly give high rates as compared to equities that offer enough risk premium for people to think of investing.

Newer population is coming apart from existing population from metros and tier 1. This is a huge inclusion for the broking industry due to which the industry can easily grow at this rate for the next 8-10 years.

What are the future plans for the company? You recently got board nod to foray into mutual fund business, how do you plan to approach that industry?

We have seen strong growth in our core business i.e, stock broking. We see big opportunity in giving financial planning and solutions to our clients starting from mutual funds, insurance products, mortgage products on our platform. Focus is on becoming from a single-service provider to a platform company where a customer acquired can have access to all the products offered.

We would like to enter the AMC business as we see big scope of floating passive funds like ETFs, smart beta products where we don’t require an active fund manager which I believe will disrupt this industry. There’s a huge cost on active fund management and the rewards are not proportionate. We can create a lot of disruptive products in AMC which will be more of a passive approach.

We have gotten a board approval to float an AMC, and now we are in the process of applying to regulators for approval. We have seen it taking almost 8-10 months for an approval and 8-10 months to set up the business. So, AMC will take around 2 years to become live subject to regulatory approvals.

How do you see the market pan out from the impact of the second wave?

Market will continue to look at the future. The current impact that we are going to see in the first half will already get discounted in a month or so along with corporate earnings announcement of first quarter results which may not be as great compared to quarter four. That is when I see the market to hit the bottom which is a good opportunity for investors to buy at dips keeping in view of next 3 years which appears to be far more bullish than what we have seen. When the market will look at second half and beyond, it will take a bullish stand.

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