‘Broking industry aims to double customer count in 2 years’
HDFC Securities, launched as a joint venture between HDFC Bank, HDFC, and Indocean esecurities, celebrates its 25th-year milestone. Over the past decades, the domestic broking industry has undergone several structural shifts, with one of the most prominent being investors gravitating towards low-cost brokerages. Traditionally a full-service brokerage, HDFC Securities recently introduced HDFC Sky — a flat-price broking application — as a strategic response to the emerging threat from discount brokerages. DHIRAJ RELLI, managing director and chief executive officer of HDFC Securities, in an email interview with Sundar Sethuraman, delves into the broking house’s journey and highlights key trends in the broking industry. Edited excerpts:
How do you view the evolving broking landscape where investors are exploring brokerage options?
In India, the broking space is one of the fastest-growing sectors due to the rise in retail investors from Tier-ii and TIER-III cities, along with a consistently high GDP growth rate.
Dematerialised (demat) accounts have surged from
20 million to 150 million quickly, thanks to digitisation and new players.
Multiple brokerage options are creating entry points for more investors, fostering industry growth. We welcome this scenario and offer multiple options across customer segments, from millennials to working professionals and senior citizens.
Elaborate on the role that full-service brokerage firms play
within the financial ecosystem.
At the individual level, investments and finance are sensitive matters as they directly involve and impact money, necessitating guidance. We provide comprehensive services for individuals to grow and manage their wealth.
Simplified investment options encourage the financialisation of savings.
Our extensive branch network and over 1,200 relationship managers offer advice and recommendations, creating a hybrid physical-plus-digital service offering across a complete array of investment products.
Some observers have noted large differences in technology between traditional brokerages like HDFC Securities and newer, technologydriven players. How do you see this?
With 24 years of experience and exposure to numerous market cycles, we leverage our rich domain expertise to provide intuitive features and digital solutions to our customers.
Share HDFC Securities’ performance metrics, such as revenue, profit, client base, and average daily trading volume, for 2023-24.
HDFC Securities has witnessed increase in profitability, growing 2.5 times over the past four years, from ~384 crore in March 2020 to ~950 crore in March 2024. Similarly, our revenue has surpassed the ~2,500 crore mark, with an active client base exceeding 1.2 million and a total customer count of over 5 million.
The recent launch of HDFC Sky has expanded our customer base, particularly among millennials, pricesensitive individuals, and derivatives traders.
Moreover, we have experienced substantial growth in our margin trade facility and lending book, amounting to ~6,635 crore, leading to a 120 per cent increase in annuity income from interest over time.
We completed an equity fundraising of ~1,000 crore in April 2024, bolstering our networth to over ~2,900 crore. We are initiating investment advisory and proprietary businesses, alongside establishing a full-fledged subsidiary in Gujarat
International Finance Tec-city.
What is your outlook for the broking industry? Do you foresee sustained growth in demat account registrations, with an average of 3 million accounts each month, or do you expect it to plateau? Increased awareness and regulatory robustness have led to 150 million customers, with projections aiming for 300 million customers in the next few years. This trajectory indicates robust compound growth, with 50 per cent of India’s population expected to utilise broking and investment services.
How does HDFC Securities approach client acquisition in today’s competitive market?
Our dual approach, utilising digital and physical resources with aggressive pricing and differentiated offerings alongside comprehensive brand campaigns, attracts a large customer base.
In the broking industry, the customer lifecycle value exceeds acquisition costs, justifying increased marketing spending.
Over the past six months, we have intensified our marketing efforts for HDFC Sky, aiming for substantial market share and organic growth.
The derivatives segment contributes to over 97 per cent of the overall market volume. Our focus on derivatives has significantly intensified following the launch of HDFC Sky.
OVER THE PAST SIX MONTHS, WE HAVE INTENSIFIED OUR MARKETING EFFORTS FOR HDFC SKY, AIMING FOR MARKET SHARE AND ORGANIC GROWTH”