‘We don’t see market going down significantly in next 2 years’

In an interaction with BusinessLine , Prakarsh Gagdani, CEO of 5paisa.com, a subsidiary company of IIFL, outlines the company’s ambitious plans in respect of customer acquisition, and says that technology is the base that keeps costs low. He is also very bullish on the Indian capital market. Excerpts:

With many discount brokerages in the market, what is your USP (unique selling proposition) to beat the competition?

We are not only a discount broker but a unified financial marketplace where you can go and buy insurance, mutual fund as well as equity. Technology is the base which keeps our costs low and lets us offer various products under one roof.

Our discount broking has a paperless account opening system along with advisory. A PAN and Aadhaar card are enough; you can start trading within an hour.

Apart from this, mutual funds and all types of insurance such as term, health and car insurance are available under one roof. So, our USP is that we are 100 per cent online, provide services at least cost, and offer a range of financial products.

What are your expansion plans?

On the trading front, we are planning to start commodities as well.

But at the moment, our sole objective is to acquire more customers, for which we are expanding our team and are focussed on customer engagement activities on online platforms, including social media, to reach people.

We are also creating a series of educational videos on YouTube.

From about 15,000 customers, we intend to take our customer base beyond 1 lakh customers by the end of this financial year, which represents 600 per cent growth.

Tell us about your robo-advisory...

It’s a customised advisory solution based on the customer type and profile. For instance, a mutual fund recommendation may be provided based on the investor’s objective, income, goal, the amount of risk he/she can take, and so on.

Similarly, when it comes to insurance, the type of policy and the sum assured is determinedbased on the profile.

It is a completely automated system and we are the first in the country to offer robo-advisory service in insurance.

What is your view on the market?

We are extremely bullish on the market. At least for the next 18-24 months we don’t see the market going down.

Valuations are a little stretched right now, but the level of exuberance is not like what we saw in 2007-2008. PE ratios are far lower now, and forward earnings more robust. Secondly, inflows from mutual funds and domestic financial institutions are healthy. The Sensex can cross the 35,000-mark for sure.

There are, of course, risks associated with it, particularly geopolitical risks. However, a 5 to 10 per cent correction is always healthy for the market. From a three-year perspective, we can see the market growing at 12 to 15 per cent annualised.

What factors can likely trigger a 5-10 per cent correction?

Mostly external factors. For example, if the US Federal Reserve hikes rates consistently, it might have an impact on foreign portfolio inflows.

On the domestic front, a rise in inflation and an erosion in corporate earnings are the two factors to watch for, which could affect the market.

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