About the Company:
The company is a diversified financial services provider, offering a broad range of services, including stock, commodity, and currency broking, institutional broking, margin trading facilities, depository services, and distribution of mutual funds. Additionally, it operates as a non-banking financial company (NBFC) and serves as a corporate agent for insurance companies.
In Q4 FY24, the company had a total client base of 22.2 million, with a strong presence among younger investors, as 48% of its clients are under 25 years old. Its revenue primarily comes from broking services, with 85% of gross broking revenue generated from futures and options trading. The company recently raised INR 1,500 Crs. through a Qualified Institutional Placement (QIP) to support margin obligations and future growth. It is also restructuring its operations by separating its broking businesses into distinct entities and expanding into wealth management.
Our investment interpretation :
Our investment in the company was anchored in its position as the first discount brokerage to be listed in India, offering a unique value proposition in the financial services sector. We identified a compelling value-buying opportunity, driven by the company’s rapid client base expansion, especially among younger investors, and its robust growth in the futures and options segment.
By constantly tracking the company, we gained valuable insights into the business strategy and its ongoing restructuring efforts, including its focus on separating the broking businesses and venturing into wealth management. These moves, combined with the promoter’s experience and vision, further solidified our conviction in the long-term growth potential.
The company’s decision to raise INR 1,500 crore via QIP to support margin obligations and fuel future growth, along with its prudent financial management, aligns well with our focus on scalable and sustainable business models. The alignment in goals between the management and shareholders has been critical in reinforcing our commitment to remaining invested in the company over the long term.
Returns:
MCap on date of Investment: INR 2,854 Crs. .
MCap on date of Exit/ Today: INR 23,009 Crs
Multiple on Invested Capital (MOIC): 8x
