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On the back of rising popularity of equities, HDFC Securities, the second-largest retail brokerage house in the country, is eyeing an active user base of 10 lakh in 2018-19, a top official said.
“If achieved, this would be a substantial jump over the current 6.5 lakh active user base for this retail-focussed brokerage house,” Dhiraj Relli, Managing Director & CEO, HDFC Securities, told BusinessLine .
“This game is not about how many customers you have. It’s about how many of them are active. In the last two years, we expanded our active user base to 6.5 lakh from about three lakh,” he said.
The target of 10 lakh active customers is ambitious, but looks achievable, given the increasing financialisation of savings, according to Relli.
Relli highlighted that the number of active customers (active with the exchange) in the secondary equity market was limited at 75 lakh. There are six crore mutual fund folios and the number of systematic investment plans (SIPs) is 1.6 crore.
Ready for riskier assets
“We believe the penetration of equities is limited in India. Now, more and more investors are looking for financial products, with many ready to take exposure to riskier assets. We believe more people will come to equities in the coming days,” he said.
HDFC Securities, which started its journey in 2000, gets 80 per cent of its revenues from the broking business. Even this 80 per cent is largely from the cash market and not the F&O segment, Relli said.
Asked if he sees new-age discount broking houses such as Zerodha as a threat, Relli said: “They are a threat. Having said that, both (discount brokerage houses and full-fledged service providers) will co-exist.”
Earnings growth
Relli also sees pick-up in earnings growth for Nifty 50 companies in 2018-19 and the next fiscal. “With the return of earnings growth, our house view is that Nifty will be around 11,800 by end March 2019,” he said.
This optimism is based on earnings bump up in 2018-19. Nifty companies’ EPS had flat growth in the last four years. However, there will be a shift in the next three years with EPS going up to 595 for financial year 2019, 696 in financial year 2020 from estimated financial year 2018 level of 471. “After a near-term price correction, the markets would move away from liquidity-driven rally to earnings-led rally,” he said.
No IPO
Relli also made it clear that HDFC Securities was not looking to list at the bourses, although several of its competitors are already listed or are looking to list.
HDFC Securities will, in the coming days, focus on expanding the distribution of third-party products, especially mutual funds.
“In the last two years, we could incrementally create three lakh SIPs. In no time we are among the top 10 distributors incrementally to sell SIPs. We still believe SIP is a phenomenal route for investors to enter the markets,” he said.
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