Broking revenues set for boost: ICRA

The broking industry could see as much as 20 per cent growth in revenue to ~19,000 crore in 2017-18, says rating agency ICRA. Healthy volume growth and increase in share of the cash segment will contribute, it says,

“Volumes are likely to grow 20-25 per cent in 2017-18, supported by positive investor sentiment and a benign capital market outlook. The initial public offering (IPO) pipeline is likely to further support retail participation on the exchanges. The higher yielding cash volumes are expected to receive a boost, with a likely increase in margin trading by brokerage houses pursuant to the recent regulation on lower margin requirements,” ICRA.

Equity turnover at the exchanges grew 35 per cent in 2016-17, with average daily turnover increasing to ~4 lakh crore, from ~3 lakh crore the previous year. The positive market sentiment continues, with average daily turnover increasing to ~5.7 lakh crore in the June quarter, 40 per cent more than the 2016-17 average.

“Increase in domestic inflow provides greater resilience to capital markets. While the current market outlook is benign and the IPO pipeline for 2017-18 is likely to encourage retail participation, a meaningful revival in corporate earnings would provide further fillip to the capital markets and boost FII (foreign institutional investor) equity inflows,” said Karthik Srinivasan, senior vice-president and group head - financial sector ratings, ICRA. “We expect further improvement in the profitability of brokers in FY18, driven by higher revenue, following an uptick in the equity markets and higher interest income,” Srinivasan added.

Equity turnover at the exchanges grew 35 per cent in 2016-17, with average daily turnover increasing to ~4 lakh crore, from ~3 lakh crore the previous year