Home / Money / Personal Finance /  How MarketsMojo’s Mohit Batra looks to stand apart in PMS field
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The PMS, or portfolio management services, industry is crowded and also not very scalable primarily because of ticket size restrictions, says Mohit Batra, CEO of MarketsMojo, an artificial intelligence (AI)-based stock research and advisory.

MarketsMojo, which was founded by Batra and Joyson Thomas in 2015, is a financial investment analysing platform that examines all the listed stocks in India and 20 other global markets based on 550 parameters. The platform claims to cover around 60% of the global market capitalization and oversees 65,000 crore worth of portfolios and, of this, it directly manages assets of 6,000 crore.

Batra talked to Mint about the firm’s stock analysing process, the human factor in taking a call on any stock, the company’s plan to enter the PMS industry and its initial public offer (IPO) roadmap. Edited excerpts from an interview:

Describe the nature of your business, services and products.

We started MarketsMojo around eight years ago, primarily for a couple of problems that we saw in the market. Limited and lack of quality research for equity instigated us to start a high-quality research platform that covers 100% of the listed companies. That was not an easy task because covering every single stock on a real-time basis and actively in the market is not something that we had heard of either locally or globally.

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We created an intellectual property (IP), where today we analyse around 550 parameters across every stock. We analyse the stock from as long as 10 years of fundamentals that the company has declared to the latest quarter. We look at valuations, technicals and financial trends, and then give the overall score on the company. We have parallelly extended this service to 20 other global markets. So, today we have equity research cover available for around 60% of the global market capitalization, which includes countries such as India, the US, Canada, Mexico, and so on.

Since we were doing this research and our success rates were closer to 75-80% on our both buy and sell calls, we started the portfolio advisory services a couple of years back. So, we have around 6,000 crore that we manage under the investment advisor license. We have a large set of retail investors who consume our equity research—our subscription model—in India. We also have a B2B model where we power around 30% of the retail brokerage industry in India. Some of the large names of equity brokers on the retail side use our research. It’s done on a white label basis.

What is the nature of investors on your research platform and the stock advisory vertical?

These are either self-directed investors or equity advisors. A lot of investors today come to our platform to obtain unbiased research because we don’t have any transacting platform behind it. We have a flat fee model, and the ARPU (average revenue per user) on our platform is around 10,000 a year.

Investors are typically in the age group of around 30 to 60 years. So, it’s a very broad range. Our average portfolio sizes are between 15 lakh and 20 lakh. With five million demat accounts being opened over the last two years, the average age on the platform is coming down. The average investment size is 1-2 lakh.

Can you take us through your stock research process?

On the platform, any stock you search gets an overall rating, and the reasons for that particular rating . Users also get a real time research report on the company. We rate a stock based on 550 parameters which sit under four key factors. First, we have the quality of the stock where we look at the management risk, growth and capital structure.

This quality factor works on a five-year fundamental approach. So, we look at the cash flows, balance sheets, profit and loss and annual reports over the last five years. The second is financial trend, which is dependent on the last quarterly financial result that the company has declared. The third main factor that you look at is how much the company’s valuation has changed. The fourth and final factor is how the stock is doing currently technically. There are close to 270 research cards on every stock.

Is there any human touch point or intervention when selecting a stock?

When a stock goes into our basket, there are five categories on which it is rated: strong sell, sell, hold, buy and a strong buy. Now, whenever we have a buy or a strong buy, before it is uploaded, we do a CG, or corporate governance, test. It’s a very simple test to ascertain certain things. Certain corporate governance factors are already built into the AI, for example, third party transactions and dividend payouts. Updates such as police report, background check on the promoters are not data driven, hence they cannot be built into the system.

What is the break-up in terms of users and assets for stock advisory and RIA services?

We have around 2.5 million registered users, and over 100,000 paid users. Services such as our proprietary research on stocks, sections such as ‘Top Stocks’, ‘Stock of the Month’, screeners and model portfolios, are all paid for. Slowly, more investors are opting for paid subscriptions. We’ve seen people over a period of time getting a subscription for 10 to 20 years by paying money in advance.

There are a lot of people who also store their personal portfolios on our site. So, there are advisory portfolios and there are personal portfolios, the combination of these assets on our platform is 65,000 crore.

We have a 2% price structure where clients give us the money and then we advise them on stocks to buy under the portfolio approach. Under this, we have around 17,000-18,000 people who use portfolio advisory services with the total assets under management of around 6,000 crore. We are now going in for a PMS license.

Take us through your plans of setting up a PMS.

We have a Smallcase integration. So, the user can choose the brokerage house for investing. This whole process is done under a separate brand, which is known as MojoInfinity. The purpose of doing it under a separate band is because we are going in for our PMS license and this entire 6,000 crore will move to the PMS side.

The company has been set up and we are applying for the license soon. We had infrastructure requirements and regulatory requirements that need to be fulfilled. So, by the end of this month, we should be applying for the license.

The PMS industry is quite crowded. So how would you structure or separate yourself?

I think the PMS industry is crowded and is also not very scalable, primarily because of the ticket size restrictions. What we’re doing differently is that as a PMS, we will have the investment advisor license and also the alternative investment fund (AIF) license. The advantage we have here is that I’m not bound by any number of strategies. I can custom-make hundreds of portfolios and manage them through the system.

We can run multiple strategies via PMS for multiple clients and we can be more cost efficient because I don’t need manpower, fund management or advisory costs which is backing that whole scale.

Infamously, we can come under that robo-advisory definition, but robo-advisory is a misnomer in the industry. We use a lot of self-learning artificial intelligence models to create historical performances of stocks and in different market cycles, which is then overlaid with a lot of analysing factors. As much as 80% of our team size comprises people in technology and data science.

Your whole process is AI driven, which is based on the regulatory disclosures by companies. However, there is general concern over data disclosures by smaller companies. What steps have you taken to address this?

My system unfortunately only looks at numbers that are declared by the companies to exchanges. However, at times we do audit reports for the exchanges, where we flag possible errors in the data. For example, if the company is doing 16 crore profit and suddenly reports a 200 crore profit, the system immediately raises an alert. So, I can then go to the exchange and flag the issue. Those kinds of data sanity checks we do before we even consider the numbers, but I can’t go beyond what the exchange is giving me. Yet, we do have multiple data capture points from Reuters, Bloomberg and CapitalMarket. So, we can reconcile those and see if there’s any differentiation.

To be fair, now that I’m dealing in 21 countries, I can tell you that India is not that far off in terms of the quality of the numbers that are coming in.

You’re in 21 global markets. Do you plan to expand to more markets?

The issue is not the 21 markets, the issue is the availability of the data, and more so fundamental data. We’ve just actually found somebody who can give us day and prices and we don’t need intraday prices, because we are fundamental in our nature. In the next two to three months, we will be available in every single listed market in the world.

We have the same platform out there in the US, Belgium, Canada, Denmark, Finland, France, India, Italy, Jordan, Mexico and Netherlands. We cover all the companies in these countries.

We have started getting a lot of subscription clients out there for the advisory. Obviously, we will need a deeper license from one of the international jurisdictions to manage offshore money. So, we are going to go in for that. But currently we are selling subscription plans for around $250-350 for all the markets.

We have basically been a bootstrapped company for the last seven-eight years. But our ultimate goal in the next three to four years is that we’re aiming for an IPO in the conventional way.

You have 65,000 crore as assets under influence right now. What are your targets by the end of the financial year or by the time you look for an IPO?

We won’t be able to project that but our topline assets have grown by around three-four times on an annual basis for the last three years.

On a CAGR basis, the growth would be around 100% in the last seven-eight years.

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ABOUT THE AUTHOR

Abhinav Kaul

Abhinav Kaul writes on cryptocurrencies and mutual funds at Mint. His previous stints include ETMarkets, Reuters Bangalore and Press Trust of India.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
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