CIFAR expects brokerage revenue to moderate next fiscal year

Rating agency ICRA expects brokerage revenues to moderate next fiscal year. “Revenue growth rate is expected to decline to 5-7% in FY23 with total revenue forecast at ₹28,500-29,000 crore,” it said in a statement.

FY22 in strong growth

However, for the current fiscal year, the brokerage industry will post a record performance, supported by healthy participation from retail investors and favorable systemic liquidity. “According to a recent note, the industry is expected to record total revenue of around ₹27,000-28,000 crore in FY22, recording annual growth of 28-33%,” the rating agency said. .

Average daily turnover in domestic capital markets increased by 126% to ₹63.07 crore in the first nine months of FY22 from ₹27.92 crore in FY21 (₹14.39 crore in FY20), according to Samriddhi Chowdhary, Vice President – Financial Sector Ratings, ICRA Ratings.

Retail brokerage becomes dynamic

The retail brokerage segment has become more dynamic and has experienced significant disruption in recent years due to the growing importance of discount brokers. Competitively priced offerings from discount brokers and no-frills basic accounts and services have led to the realignment of pricing strategy across the industry.

Sainath Chandrasekaran, Assistant Vice President – Financial Industry Ratings, ICRA Ratings, added: “In addition to attracting clients from full-service providers, discount brokerages have helped expand the market by attracting a large number of young beginning investors.

“While the market share of traditional bank and non-bank brokers in terms of active customers moderated in FY21, primarily due to the faster rise of discount brokerages, they delivered a strong performance, as evidenced by healthy operating metrics and strong earnings growth.” he said.

Published on

March 23, 2022

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