The Big Four in this business – Groww, Zerodha, Angel One, and Upstox – continue to displace traditional brokers with a 63% combined market share of active clients by the end of FY24, up 4 percentage points in a year, showed NSE data.
These stellar gains are coming at the expense of traditional brokerage firms that continue to see a decline in the number of clients and market share, with analysts attributing the trend to the new-age savers’ familiarity with complex products, ability to do their own research, and the positive fee arbitrage on discount platforms.
Groww, founded in 2016 by four former Flipkart employees, significantly expanded its client base, adding a massive 4.1 million clients in FY24 to reach a total of 9.5 million, representing a nearly 75% increase. Over two years, Groww has added nearly 5.7 million clients. Just the additions alone would exceed the combined client base of four bank-backed firms – ICICI Securities, Kotak Securities, HDFC Securities and Axis Securities.
Zerodha, which had dominated the Indian market for several years until September of last year, saw a more modest 13% increase in clients in FY24, reaching 7.3 million, or 16% growth, in two years.
One of India’s oldest broking firms, which reinvented as a discount brokerage, Angel One, added 43% more clients in FY24, bringing its total to 6.1 million.Meanwhile, Upstox, previously known as RKSV, lost clients, and its customer base shrank 13% in FY24, or 52% over two years, to 2.5 million as of March 2024.For the year ended March 31, 2023, Groww reported a net profit of ₹449 crore compared with ₹2,900 crore by Zerodha and ₹890 crore by Angel One.
“The pace of client addition has varied across securities broking companies due to differences in client acquisition strategy and dissimilar emphasis on customer base expansion across categories,” said Deep Singh, vice president at ICRA. “Some leading brokers have witnessed relatively slower growth due to emphasis on organic expansion through word of mouth, while others have used marketing and advertising campaigns aggressively.”
Costs Bite
NSE data showed that ICICI Securities, Kotak Securities, HDFC Securities, Motilal Oswal, Sharekhan, 5Paisa Capital, IIFL Securities, and Axis Securities, among others, have seen a decline in the number of active clients over two years.
ICICI Securities has lost 39%, or more than 1.2 million, customers in two years, while 5Paisa Capital has lost 69%, or 1.2 million, clients during this period.
Deep Singh added that some traditional full-stack brokers have pivoted the focus back to high potential and sticky customer profiles after having seen high attrition or de-activation in certain customer segments following aggressive customer additions.
Traditional brokers have attempted to tap into the retail client market by either introducing discount brokerage platforms or unveiling new pricing strategies. For instance, HDFC Securities launched HDFC Sky, Kotak introduced its personal finance platform, Kotak Cherry, and Sharekhan launched Espresso. However, these endeavours have not seen widespread success.
“Discount brokers offer products 90-95% cheaper than traditional brokers with a simple and fast trading platform with all essential services,” said the CEO of a discount broking firm. “Traditional brokers provide research reports and additional services like a relationship manager, which the new generation does not prioritise.”
A Groww official said the brokerage provides a simple, transparent and delightful experience to its customers. “The platform provides investors with tools and information that can help them make informed decisions. The product experience generates positive word of mouth, which brings in more customers,” he added.