HDFC Securities plans to roll out a low-cost digital broking offering in January-March next year, marking its entry into the new segment of hardcore retail investors, its MD & CEO Dhiraj Relli has said.

This foray — which will ride on an App, web version and a centralised dealing desk (no relationship managers or branch access) — is expected to help HDFC Securities penetrate among millennials, Gen Z and other customers who are wanting to operate only digital and that too in low transacting costs platforms.

“Currently, we are serving the UHNI, HNI and mass, affluent customers. We have not been enticing hardcore retail customers like GenZ and millennials who are only digital oriented. We will be making our foray into this new segment with the low-cost digital offering and it could expand our business,” Relli told BusinessLine.

The broking house is also aiming to take the number of its active customers from the current 1.2 million to 3 million in the next 2-3 years. “We would like to go for 3X growth in three years,” Relli added.

Increased competition

The planned foray into low-cost digital broking offering is being seen as HDFC Securities’ response to the recent trend of increased competition from tech-led discount brokerage houses, who have stolen a march over bank-based brokerage houses in adding new customers. Some of the new entrants (tech-led low-cost discount brokerages) had taken higher market share in the last 3-4 years, outperforming players like HDFC Securities on active customers count, who had to date preferred to be a full service brokerage house.

“It (low-cost offering) will be a differentiated offering at different price points and a sub-brand of HDFC securities. It will be a low-cost next level of digital offering for all customers and not be restricted to millennials but would be available to all the customers who want to use Do It Yourself (DIY) tools,” he said.

Tapping the opportunity

Asked as to why HDFC Securities was looking to jump into the tech-led discount broking bandwagon, Relli said it was more to do with tapping the opportunity in the market. Over the next five years, he expects the number of demat accounts in the country to grow to about 20 crore. “Next level of growth is going to come from first-time job seekers, youngsters, millennial job seekers who are looking forward to taking more exposure to risky assets. Many of them have already opened new demat accounts. There is a disproportionate liking for the risky assets among current day youngsters and who are very keen to have a seamless transacting experience,” he said.

It may be recalled that HDFC Securities was earlier opening only demat accounts in a physical setting, but later introduced a digital journey. Also, this broking house was earlier focused only on HDFC Bank customers to acquire new customers but now has started focusing even on non-HDFC Bank customers.

Relli also asserted that HDFC Securities was focused only on profitable and sustainable growth and would not look to chase customers if there is no profitability.

Asked about the subdued financial performance of broking houses in the recently ended April-June quarter, Relli admitted that Q1 was a difficult quarter for most players compared to Q4 and also Q1 last fiscal. Many brokerages had revenue challenges as both the volume and values transacted, especially in small and midcaps, saw a significant drop.

On foreign portfolio investors, Relli said he expects them to start aggressively buying in India in the next 3-6 months “as by that time there are 3-4 mega concerns that will be behind us”. “By the end of this calendar year, we will be able to deal with inflation,” he added.

Relli also expects Nifty to hover around 16,000 in December this year and move up to about 18,000 in July-August next year. “I expect corporate earnings growth rate to be in high teens this year,” he said.

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