5PAISA - 5paisa Capital Limited Share Price

In the earnings call for Q1 FY '26, management provided an optimistic outlook, highlighting a strong recovery in the broking industry. They noted that easing global uncertainties and improved domestic economic indicators led to heightened investor sentiment, with the Nifty and Sensex indices rising approximately 16% from recent lows. The industry added 6.69 million new customers, pushing the total number of demat accounts in India to over 198.5 million.

5paisa specifically reported acquiring 80,000 new customers, bringing its total customer base to 4.91 million, though this reflected a 12% decline quarter-on-quarter. However, their average daily turnover (ADTO) surged to Rs.2.25 trillion, marking a robust 17% growth from the previous quarter. The company's mutual fund assets under management (AUM) reached Rs.1,573 crores, indicating a 13% increase, while their total income rose to Rs.77.8 crores, a 9% quarter-on-quarter growth, and profit after tax (PAT) stood at Rs.11.5 crores, up 15% from the previous quarter.

Management emphasized continued investment in technology and product enhancements to improve customer experience, including the launch of new tools such as an options strategy builder and an advanced AI trading assistant. They plan to focus on tech upgrades in the near future, potentially shifting towards more aggressive client acquisition once these improvements are concluded.

Despite these advancements, management remains cautious about acquiring lower-quality customers and intends to balance growth with maintaining a high-quality client base. The overall strategy remains targeted towards enhancing their tech-first approach to capture value in the competitive broking space without diversifying into wealth management products in the short term.

1. Q: What marketing initiatives are you taking for newer client acquisition and how do you acquire new clients in the near future?
   A: Marketing is an ongoing investment for us. We employ digital performance marketing, organic initiatives, and content-led marketing. While we have no major changes planned, we continuously calibrate our strategies based on market conditions. The focus is on acquiring high-quality clients, ensuring they have a sustainable payback period.

2. Q: Are you seeing any moderation in investing activities due to macroeconomic events? Will you cross-sell other products like insurance?
   A: There's been some moderation compared to last year's market frenzy, but interest in investing remains strong. As for cross-selling, we currently have no plans to offer third-party products; our focus is solely on enhancing trading and investing activities.

3. Q: Will the recent SEBI regulations impact F&O turnover?
   A: Regulatory changes have affected volumes in the past but we see signs of recovery. Future impacts are uncertain, but historically, investor interest tends to return to normal levels after adjustments to new regulations.

4. Q: Can you elaborate on your AI assistant platform? Is it an algorithmic trading platform?
   A: Our AI assistant, MCP, is not purely an algorithmic trading platform. It connects to a broking account to provide insights and facilitate certain trades through AI-driven interaction, making investment management user-friendly.

5. Q: What's the client mix engaging with trading versus investing? Are you providing fundamental research to empower customers?
   A: We don't share specific customer data, but many clients engage in both trading and investing. We offer mutual fund options and basic recommendations for stocks, though our focus remains tech-driven rather than extensive fundamental research.

6. Q: What is the cash position available from the last balance sheet?
   A: Approximately INR 1400 crores in cash exists, with around INR 500 crores belonging to us, and the rest tied to client funds. This balance is essential for operational needs.

7. Q: What is your strategy in the next three years amidst competition from wealth management services?
   A: We aim to build trust while being tech-first. There is much potential for growth in the broking space, and currently, we focus on enhancing products and user experience rather than diversifying into wealth management.

8. Q: What is the mix of customer acquisition by tier cities?
   A: About 75-80% of our new customer acquisitions come from tier 2 and tier 3 cities, reflecting our growing appeal outside major metropolitan areas.

9. Q: How do you address discrepancies between app downloads and actual account openings?
   A: Many downloads represent interest without account openings. The core focus remains on the 49 lakh active accounts, as this shows actual engagement rather than mere curiosity.

10. Q: What can you say about pricing levers in the market? Is there potential for raising prices?
    A: There's no consensus on raising prices as each broker sets its own strategies. For us, value and service quality are crucial; price adjustments are secondary and depend on competitive dynamics and client value perception.

11. Q: What is the revenue split between cash and derivative trades?
    A: Our revenue predominantly comes from derivatives, with a split of about 80% from derivatives and 20% from the cash segment, consistent with industry norms.

12. Q: Are there any revenue streams other brokers have that you don't?
    A: We offer margin trading facilities and have various revenue avenues, but we do not currently pursue cross-selling outside of broking.

These questions encapsulate the major highlights from the Q&A segment of the earnings call, focusing on marketing strategy, regulatory impacts, technology advancements, and client demographics.