With Karvy boost, Axis Securities eyes number 2 slot by FY23

By: |
March 26, 2021 8:51 PM

With over 36 lakh customers, of which 11.5 lakh came from Karvy, the brokerage from Axis Bank is the third largest in terms of customer base.

Axis bankOn Day 2, the retail portion of the Axis Bank OFS managed to garner just 28.5% subscription.

After toppling Upstox to become the third largest brokerage following the acquisition of Karvy Stock Broking last month, Axis Securities has set itself a target of becoming the second largest player over the next two years.

With over 36 lakh customers, of which 11.5 lakh came from Karvy, the brokerage from Axis Bank is the third largest in terms of customer base.

The market is led by ICICI Securities with 50.7 lakh customers, followed by Zerodha with 40 lakh as of end-December, when Upstox was the the third largest with around 35 lakh.

Karvy is the second acquisition for Axis Securities after Enam Securities in 2011.

“Our target is to become the No 2 in customer base and also in revenue market share. With the Karvy addition, we are No 3 by customer base, and among the top five in overall market share. We hope to be the No 2 in every sense by FY23. We already are the second largest when it comes to cash market segment,” B Gopkumar, the managing director of Axis Securities, told PTI.

He said setting a higher target does not mean it will change its long tradition of focusing on delivery deals, which at present constitutes 40 per cent of its volume, or will offer free trades as many do now or drive intra-day segment where the maximum retail volume is.

In January, when the market was on a song, 56 per cent of its active customers were in the cash market alone, he said.

“Our focus has been and will continue to be delivery, which has been averaging at 40 per cent of our volume. There are days when we cross even 50 per cent delivery volume. Of late, it has been trending at 43 per cent as against the industry average of 28 per cent,” he said.

But he was quick to admit that volume growth comes from the cash market, while its focus has been the F&O segment primarily because the overall trading volume, as much as 93 per cent, is futures and options (F&O) only.

He also said of the 26 lakh customers pre-Karvy, 19 per cent were Axis Bank customers.

On the retail participation in bonds and debentures, he said it is a non-starter with daily participation averaging at just 70-80 customers, and the SIP customer count is 1.78 lakh, while it has over 1,000 customers who invest in US equities.

Gopkumar said of the 11.5 lakh customers acquired from Karvy, 4.47 lakh are active now.

On customer addition, he said the company on an average opens 40,000 demat accounts a month. In 2020, it added 3.75 lakh demat accounts, nearly double of 2019.

Regarding the performance so far this fiscal, he said in the December quarter net income soared 10 times and revenue by five times, but did not quantify the numbers. And so far Q4 has also been good, he added.

For the nine months of this fiscal, Axis Securities’ net income grew seven times to Rs 118 crore over the full year of FY20, according to the Q3 earning filings.

In late February, the exchanges picked the bid of Axis Securities to take over the broking clients of Karvy.

This was after the NSE, BSE, and the Metropolitan Stock Exchange issued a circular on February 6, 2021, seeking to transfer the trading and demat accounts held by Karvy to another brokerage.

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