In conversation with Prabhakar Tiwari, CGO, Angel One Ltd

Gen Z and millenials are today’s biggest contributors to the stock market and that is how the future trend will unfold too, says Prabhakar Tiwari, CGO, Angel One Ltd., in this exclusive interview

What is your outlook on the Indian retail broking industry? Can you highlight the changing behaviour of retail investors post-pandemic?

The Indian retail broking industry has been growing over the years, and this trend will continue in the future as well. This will be driven by digital players like us, as we penetrate further into untapped markets on the back of our digital products. Reports suggest that participation of individual investors in equity cash segment turnover increased over the years to 40.7 per cent in FY22 from 33.0 per cent in FY16. Retail investors owned 9.7 per cent of Nifty-listed companies as of December 2021 compared to 8.6 per cent in March 2019, with the majority of the increase coming in nine months in FY22.

It is worth noting that retail investors have almost fully offset the reduction in ownership by FIIs over this period. In FY22, retail investors made a net investment of Rs 2.1 trillion, in both cash and derivatives segments, through the NSE platform compared to Rs 1.1 trillion in FY21. More specifically, in the last six months of FY22, i.e. from September 2021 to March 2022, while FIIs were net sellers to the tune of Rs 1.9 trillion. This was offset by investments of Rs 1.1 trillion in the cash segment by the retail investors. It is a dramatic shift in the retail investors’ behaviour. We strongly believe that as the retail penetration increases from the current 6.4 per cent over time, this share in overall ownership and investments in stock markets will increase going forward.

Angel One experienced its best-ever quarter in Q4FY22 across operational and financial metrics. What are the key drivers responsible for such robust multifold growth across parameters? 

We registered a strong gross addition to our client base with 1.5 million clients in Q4FY22 as compared to 1.3 million clients in Q3FY22. Angel One also had the highest incremental NSE-active clients at nearly 0.6 million and clocked the highest number of orders at 210.8 million and the highest average daily turnover at Rs 8.6 trillion. Our growth has been driven by the expanding client base. We are catering to clients across age groups but with a major focus on Gen Z and millennials, who are digital natives and welcome the DIY processes enabled via apps and websites.

With the extensive use of artificial intelligence and machine learning, we have synthesized processes to develop seamless investor journeys. The best-in-class experience appeals to our target audience. The key drivers responsible for our robust growth are our state-of-the-art products and services, which enable people to make mindful investment decisions and increase their wealth. For instance, our rule-based recommendation engine that can analyse more than a billion data points – ARQ Prime – scans all types of stocks and picks winners across value, quality, and high momentum and growth stocks across the market-cap.

Similarly, our users benefit from a simplified flat pricing structure of zero brokerage on delivery trades and a nominal flat fee of Rs 20 for intraday, futures and options, currency and commodities under the iTrade Prime Plan. We also have a huge repository of digital content, which our clients can use through platforms like Smart Money that offer comprehensive investor education via webinars, bite-sized content on social media and YouTube, and knowledge house on the website and podcasts. Our users also leverage third-party integrations with platforms like Vested, Streak, smallcase, Sensibull, etc. Vested enables our clients to invest in US equities.

They can buy curated baskets of stocks or ETFs based on an objective, theme or strategy through smallcase integration. Streak enables plans and manages their trades by deploying systems that do not require prior coding knowledge. Sensibull enables options trading. We also have SmartAPI, which is a free tool that allows users to create trading and investment platforms with the help of a set of free API software. It allows them to provide full-service broking without having to become a stockbroker. There are several factors enabling the company’s consistent growth but at the core is customer satisfaction which drives us.

In FY22, Angel One added 5.3 million clients, which is 2.2 times more than the clients added in FY21. For how long do you expect this high-growth momentum to sustain? Could the industry take a breather before the next leg of growth gets underway? 

The current growth momentum is most likely to continue going forward as well as we are consistent with our efforts to increase retail participation in the stock market. Our strategy will be to penetrate deeper into Tier II, III and beyond markets as we empower the young millennials and Gen Z and let them undertake their own wealth creation journey.

Angel One currently commands ~10.3 per cent market share of India’s total, as well as active demat accounts. What percentage of market share do you envision capturing in the next three years?

Our prime goal is to emerge as a top choice among users on the back of our state-of-the-art solutions. We envision gaining the majority market share, consequently emerging a leader in the segment. We realise the stock market has long remained accessible to people in urban areas. At Angel One, our effort is to democratize it and make wealth creation possible by introducing equities as an asset class to people across the country – specifically in Tier II, Tier III and beyond cities.

Currently, what are your top three strategic priorities?

Our top three strategic priorities are to strengthen our leadership position to become the largest retail broking business in India, augment our investment in our mobile platform, artificial intelligence machine learning capabilities and other newer technologies, and establish a leadership position in the wealth-tech space. Our efforts around client experience keep Gen Z and millennials in the centre as they give utmost importance to a seamless experience while using an app or website. We make sure to integrate customer feedback into our development process. We are penetrating the untapped markets by deploying our marketing efforts to reach audiences in non-metro cities and encourage and enable them to join the stock market. Since we understand that our users are new to the sector, we empower them with the right educational tools. We are constantly working on products and services that will help investors meet their financial security.