HDFC securities expects low-broking arm Sky to turn in profit FY27
HDFC Securities, which ventured into the discount-broking space a little over a year ago with its low-cost platform HDFC Sky, expects the platform to turn profitable in the next fiscal year. The company has seen remarkable growth in the past 13 months, acquiring over 1.1 million customers as of December and witnessing rising trading volumes. Despite this growth, the company has ruled out any plans for a share sale, citing strong financial performance.
The full-service brokerage, along with its discount broking arm, has added 1.2 million new customers so far this fiscal, taking its total client base to 6.1 million. However, the number of active clients remains at 1.4 million. Of the total additions, a significant 1.1 million customers have been onboarded through HDFC Sky.
Dhiraj Relli, managing director and CEO of HDFC Securities, stated that discount broking is the future of the industry, with full-service brokerages likely to cater primarily to high-net-worth individuals (HNIs) in the future. "The trend is clear from the substantial number of customers we’ve added in just 13 months—1.1 million. This is further validated by the rapid growth of other discount platforms," he said.
Relli revealed that HDFC Sky is expected to achieve cash profitability in the next fiscal year and break even by FY27, despite no plans to increase the Rs 20 per order charge for retail customers. He also highlighted the profitability of HDFC Securities' margin funding business, which offers up to 270 trading days of funding with a book size of Rs 7,500 crore and earns 13-15% interest monthly.
The company expects to close the current fiscal year with a revenue of Rs 3,300 crore and a net income of Rs 1,165 crore, up from Rs 950 crore last year. Relli emphasized that the company does not require additional capital, ruling out an initial public offering (IPO). "We raised Rs 1,000 crore through a rights issue last year and are making good profits, so there’s no need for fundraising," he explained.
On market outlook, Relli predicted modest returns from the Nifty in 2025, stating that the index, currently trading at 23 times FY25 consensus earnings and 20.5 times FY26 estimates, may touch 26,580 points next year. He cautioned that investors might face lower-than-expected returns as the broader market appears to have priced in much of the anticipated growth.
The discount broking trend, led by Zerodha, has reshaped the brokerage landscape, with full-service players losing market share.
Groww has emerged as the largest platform with 13.1 million active customers, followed by Zerodha with 8.1 million, Angel One with 7.6 million, and Upstoxx with 2.9 million. HDFC Securities currently has 1.4 million active customers, while the total number of active demat account holders in the country stands at 50 million out of 160 million.
Zerodha remains the most profitable player in the industry, posting a net income of Rs 4,700 crore in FY24 on a revenue of Rs 8,320 crore. However, its founder, Nithin Kamath, recently warned that new SEBI regulations on broking charges could negatively impact the sector’s profitability in the future.