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Zerodha Sets The Revenue Pace In India’s Investment Tech Market

Zerodha Sets The Revenue Pace In India’s Investment Tech Market

India is home to more than 400 investment tech startups. The investment tech market is expected to reach $14.3 Bn in 2025

Zerodha led in terms of revenue generation with $154.0 Mn in FY20, it is the biggest stock brokerage firm with 3.4 Mn active NSE client base in February, 2021.

None of the Indian robo advisors were profitable in FY20

The outbreak of the Covid-19 pandemic has disrupted most industries and compelled consumers to go digital.  A large number of middle class people, who either lost their jobs or faced salary cuts are looking for avenues to improve their income. The rise of investment tech platforms have given avenues to first time investors to take a plunge in online trading of stocks. This has given a boost to India’s investment tech sector, which currently boasts of more than 400 startups.  

According to the latest report by Inc42 Plus titled Investment Tech In India: Rise Of Retail Investment, the country’s investment tech market is set to reach $14.3 Bn by 2025.

Investment Tech Landscape

Competition In India’s Investment Tech Sector

The investment tech market in India is led by bootstrapped Zerodha, with 5Paisa, Upstox, Groww, Paytm Money, SAMCO also seeing share of the limelight.

Competitive Scenario Of Investment Tech Analysis

Who Is Winning The Investment Tech Revenue Battle?

Investment tech platforms were majorly categorised into two categories:

Discount Brokers

Discount brokers financial analysis

Discount brokers are the brokers which execute buy and sell orders and charge a flat fee or low brokerage for the service.

Zerodha, an investment tech unicorn, led among discount brokers with $154 Mn revenue in FY20. It witnessed a growth of over 15% in the revenue in FY20 as compared to the last financial year. According to  National Stock Exchange data, it had an active client base of more than 3.4 million as of February 28, 2021, and it is the biggest share brokerage firm in India.

Upstox commands the second position in the sector with revenue of $21.8 Mn in FY20. It had the second-highest active NSE client base —  1.8 Mn as of February 28, 2021, which is nearly half of the market leader, Zerodha. It reported a loss of $5.3 Mn in FY20 on the back of  3X rise in the expenses as compared to the previous fiscal year. It also increased its advertising promotional expense by 7.4% in FY20.

Robo Advisors

Robo advisors financial analysis

Robo advisors are automated investment platforms that provide algorithm-based solutions after analysing a user’s financial position (existing assets and cash flow), goals, aspirations, time horizons, risk appetite and capital market expectations.

Fisdom led among robo advisors in India with a revenue of $ 1.7 Mn in FY20. It serves nearly 3 lakh active customers. It saw more than 80% growth in its AUM even during the pandemic. Despite a growth of 153.7% in the revenue, it was not able to be profitable in FY20.

None of the Indian robo advisors firms were profitable in FY20 since robo advisors are not much popular in India and operate in a nascent market.

Way Forward For Investment Tech Platforms In India

According to the latest release by Inc42 Plus titled Investment Tech In India, Rise Of Retail Investment, Report 2021, the sector  is set to reach $14.3 Bn by 2025, driven by the rise in digital infrastructure, the growing interest of millennials in capital market investments and a compelling push by the new normal due to the Covid-19 pandemic.

Several emerging opportunities such as rise of one stop investment solution for discount brokers, the emergence of hybrid brokerage model, deployment of new technologies and continued partnerships are expected to pave the way for investment tech platforms.

These new opportunities and many more, as presented in the latest release from Inc42 Plus — Investment Tech In India, Rise Of Retail Investment, Report 2021 — are likely to catalyse the growth of the investment tech sector, especially as the Covid-19 pandemic is triggering the interest of millennials to invest via investment tech platforms and stay in control of their wealth-building plans.