Good afternoon, ladies and gentlemen. I'm Telshia, moderator for the conference call. Welcome to 5paisa Capital Q3 FY23 earnings conference call. We have with us today the management of the company. As a reminder, all participants will be in listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star and then zero on your touchtone telephone. Please note this conference is recorded. I would now like to hand over the call to the management. Thank you. Over to you. A very good afternoon, everyone. Myself, Prakarsh Gagdani, CEO and Whole-Time Director of 5paisa, along with my colleague, CFO, Mr. Gourav Munjal, welcome you all for our Q3 FY23 conference call. At the outset, I would like to wish you all a very, very happy new year. I wish that 2023 may be much better than 2022. Since the Q3 FY23 was more of a mixed bag, if you look at the overall market. On one hand, Nifty touched an all-time high of 18,847 on 1st of December. On the other hand, the new Demat account growth slowed down. We are seeing some fatigue in last two quarters, 2-3 quarters. As an industry, we opened almost 55 lakh Demat accounts, which is 10% less than what we opened previous quarter. On one hand, derivatives turnover improved by almost 19% quarter-on-quarter, but our cash market turnover at an industry level was at down by around 1.5%. We also saw some regulatory implementations this quarter, like the running account settlement of clients that started in the first week of every quarter now. We did our first part in the first payoff in on 7th of October, and the second happened just now in January. As a company, we have fared well in Q3 also on an overall 9-month ended December 2022 basis. Our revenues for the 9-month ended December 2022 stood at around INR 248 crore with a growth of 18% year-on-year, with a PAT of INR 29.1 crore, a growth of 212% year-on-year. Even on a quarterly number for Q3 FY23, our revenue grew sequentially by 4% to INR 83.8 crore and PAT grew by 2.6% to INR 11 crore. In our expenses for this quarter, we also had a one-time expense of INR 7.09 crore towards margin penalty reversion, a regulatory requirement, but that is a one-time expense and we did that in this quarter. We have also maintained, despite all this, we have maintained a profit ma rgin of 13%. Our growth in profits is on the back of improvement in our acquisition quality, superior trading experience and a further reduction in CAC of around 9%. We have not just improved our ADTO by around 36% from INR 1.69 lakh crore to INR 2.05 lakh crore, but we have also improved our market share. Our strategy of focusing on revenue and profitability by acquiring good quality customers has started to pay dividends. Talking about our product, in my last investor call, I had mentioned that we were launching a dedicated trading terminal for derivative traders. We call it FnO 360. I'm happy to report that our product, which is right now still in a beta phase, is receiving good traction and reviews from our customers. This terminal, along with our other initiatives, have helped us to improve our derivative market share. Apart from our regular business, our boards of both 5paisa Capital Limited and IIFL Securities Limited approved acquisition of online retail business of IIFL Securities by 5paisa Capital. With this, we will acquire close to 1.5 million customers who are part of our online retail business of IIFL Securities. This customer base will boost our overall client base by around 40%. We expect a good revenue growth and also profitability with this acquisition. The acquisition will be effective 1st April 2023. Right now we are undergoing the procedural and regulatory process, which we hope to complete in 8-12 months from the time we have filed to the exchanges and the other regulatory authorities. For now, I have this as my opening speech. I open... I request everyone if you have any questions, you can go ahead and ask. May I request operator to open the question Q&A session. Sure, sir. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press Star and one on your telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing Star and one again. We will wait for a moment while the question queue assembles. Ladies and gentlemen, if you have any question, please press Star and one on your telephone keypad. Ladies and gentlemen, if you have any question, please press Star and one on your telephone keypad. The first question comes from Rishikesh Oza from RoboCapital. Please go ahead. Hello. Hi, sir. Thank you for the opportunity. My first question is, the average daily turnover, if we see has actually doubled year-on-year, but our revenues is flat year-on-year. If you could please explain this? Sure. ADTO not necessarily mean transfer, you know, completely transforming into the number of orders. As an organization, as a discount broker, we charge on per order basis. Now, when you attract a good quality customers, they also come with a high ticket size and also their, the per order value is also more. We because only charge on a per order basis, you may not see the same, you know, amount of revenue increase as the ADTO increase. Broadly, that's the reason. Okay. Okay. typically if you see- Sir, my second question. No. And typically- Please continue. No, I would say just typically if you see that why large traders are attracted towards discount broker is because of the cost benefit. That's why, you know, you see a difference between the revenue growth and also the ADTO growth. Okay. Okay. My second question is about ARPU. If you could please provide ARPU for the customers, that is total customers also and if it's for active customers. Currently we have, around INR 83.8 crore is our revenue. If you can, and our customer base is approximately, you know, 33 lakh. You can, you can do your math and get the ARPU. On the NSE active are, we are approximately 10.75-11 lakh active customers. You know, again, you can, look at the ARPU for the quarter and analyze it. Okay. That is noted. Okay, sir. What is our total employee count? We are in the range of around 700 - 725 employee as of now. Okay. What is our marketing cost for this quarter versus previous quarter? it is available in presentation. For the last quarter it was INR 12.2 crore, and in this quarter it is coming INR 11.6 crore. Okay. Okay. Thank you very much, sir. Thank you. Thank you. Next question comes from Manish Ostwal from Nirmal Bang. Please go ahead. Yes, sir. Thank You for the opportunity. I have a question on our cost of acquisition customers. That has declined very sharply from quarter one to quarter three. How much cost this well, current the cost level are sustainable or do you see again this will pick up? Second question related to this, of our total operating cost structure, what proportion of cost is variable piece of the total cost? Talking about the CAC, you know, we were last quarter approximately INR 574, and this quarter we are at INR 525. You know, I have said in my previous presentations that we were optimizing on the acquisition cost and more or less that exercise is over. I see the cost all, you know, hovering between INR 500-INR 600. On a higher side, it would be approximately INR 600. We see this range to be maintained, you know, in the coming quarters. I don't see a significant downside or upside, you know, beyond this. Answer to your second question, out of 100 If I get 100 INR as a revenue, our cost of acquisition is a 10% and the rest 90%, like 15% is our PBT and rest 75% is our other expenditure. Okay. Secondly, you said in your commentary the customer, the industry level, demat accounts acquisition slowed down in this quarter. Secondly, the case volume has also down quarter to quarter. What I read in the, you know, media reports that the discount brokers gain in this space, both in the cash market and day-to-market. What is your comment on that piece? If you look at last two and a half years, there has been a phenomenal rally in terms of the opening of demat accounts. Now, as a country, as a whole, we are almost at 11 crore demat accounts. A bit of fatigue was bound to happen, and it is not just in this entire year if you see, that there is rather, from Q3 last year, there has been a drop in terms of new demat account. At one point of time, we had opened around 4 million demat accounts in a month and now, you know, we are in the range of around 1.5- 2 million demat accounts in a month as an industry. I think that fatigue was bound to come, that is the reason you see a bit of a Demat account, you know, slowdown. Secondly, as compared to the cash market turnover, see cash market turnover broadly is an indicative of how the overall markets are performing in some, in terms of returns. If you look at the entire year of 2022, the index has gone up just by 4%. Even in the current quarter, you know, though we have touched an all-time high, but if you look at overall indices, they've gone up by 5.8%, which was lesser than what it was last quarter. If you look at overall year, it is more or less 4% kind of a growth. When you have markets stagnating in terms of return, the retail participation slows down, and that automatically has an effect on the cash market turnover. That is the reason why it is down. Yeah. Yeah. Secondly, in terms of customer acquisition, run rate, currently the run rate is INR 162,000. Where this trend will stabilize in your assessment? For us, because, you know, we are anyways not acquiring as many accounts as the industry does and we are focusing in terms of quality, I see, you know, I see that our acquisition run rate will be in this range of around 1.5 lakh-2.5 lakh account on a quarterly basis. We would be in this range. You know, it is difficult to actually say whether there would be a significant upside or a narrow range of acquisition because it also depends on the market. Secondly, we are, we also are, have, rather have initiated our branding exercise to cater to a quality audience and quality customers in, you know, across the country. I'm sure our branding exercise, our partnerships and also our acquisition channel will help us to acquire more customers. Though I feel it would be in broad range, but I would be, you know, you'd be happily surprised if we surpass our original number also, earlier last two, three quarter number also. Just last bit on this. When you say the quality customer, what are the two, three core metrics you look at it to qualify that customer is quality in your opinion? Yes. Yeah. You know, though there are various parameters, but typically what we look at is that One is that whether the customers who are coming are actually trading. What% of my trading customer or acquisition customers are trading. Second is approximate what is the margin with which they come. Third is the payback. The acquisition cost that I'm incurring, to what extent, to how soon we are able to recover that acquisition cost. I think these are the three, two, three parameters basis which we decide in terms of the quality of customer. Thank you, sir. Answering all the question patiently. Thank you. Thank you. Thank you. Next question comes from Kajal Gandhi from ICICI. Please go ahead. Hello. Hi, sir. Hi. Hi, Kajal. Good afternoon. Good afternoon. Sir, the one question was on the decline in the active clients, which is right now the industry trend also. How do we see tackling that? The decline in effect has been quite sharp in last maybe six months or so. Yeah. How do we tackle that? Or are you okay with whatever you have shared at this point in time, and any reasons? Kajal, I feel that the active client was anyways not a great matrix to see, you know, because that's the only industry publicly available data. It's obvious that we draw reference to that. I think it is not a right number to look at. What we should look at is the income growth, the turnover growth and the profitability growth. If you look at one of the biggest factor for a active client is the markets. Because if you look at, there has been a negative, overall at an industry level- The active customer base is degrowing for last, you know, two, three quarters. Is it, you know, translating into a degrowth of revenue? Not. Why? Because a significant portion of the revenue, even for most of the brokers, including us, comes from derivatives segment. In derivatives segment, if you look at the turnovers at the exchange level is going up. Even in volatility, even in a bad market or a good market, derivatives traders are, you know, able to make themselves active. They are able to, you know, trade, find opportunity. That is translating into revenue. I think a good way to look at if there is a revenue growth and of a, you know, a profitability growth. Whoever, F&O client which you had and was trading continued to stay and whichever was not is getting out of the system. So- Basically for you. We are. Yeah. What we are seeing is that obviously, I mean, that's a normal cycle of people who are coming to derivatives and, you know, people who end up making losses, they go out. The good trend is that we are seeing an increment in the number of customers who are trading on derivative. This number is increasing quarter on quarter. Despite the entire year, the indices were flat, and there were peaks and troughs even during the year in terms of the market participation. If you look at one matrix, which is that ADTO in the derivatives segment at exchange, that barring maybe a month or two, which was stable, not degrow, more or less it has grown. We are seeing both increment in the ADTO, increment in the number of customers trading in derivative. Okay. Yeah, for you incrementally, even if the clients, active clients have not grown, you have been able to be there on the same brokerage revenue and other income. What will be interest income component for you in this quarter? Interest income component, INR 44 crores it is coming. That's called other operating income. The entire other operating income is interest income? No, that, you, are you, asking about the treasury income, or you're asking about the interest income on the MTF? No, margin funding. Margin funding. Margin funding interest. Margin funding income is in our property. It is coming in the allied broking income. Our allied broking- All right. -income is totally INR 27 crore. Out of this, that MTF income is coming INR 15.3 crore. INR 15.3 crore, and that is the margin funding. What will be that number in the previous quarter? That was INR 13.3 crore. It has been gone up. It is INR 2 crore. Yeah, yes. Mainly because our client funding book has gone up by from average INR 246 crore - INR 280 crore. Hence, you can see the growth in income in MTF income. Do you see the pressure of rising cost of funds for you? Because I think you may not have changed your lending in MTF rates. There is a slightly increase has been made by the banker. Up to the extent of INR 300 crore, we are well-versed with the INR 200 crore or INR 250 crore with our internal network, and so it will not impact to that. Going forward, yes, it will may impact our finance cost if the book has gone up from this level. Okay. Okay. You said your cash turnover has been 5% decline quarter-on-quarter, right? 3%? Broadly around 3%-4%, yeah. Okay. Thank you very much. Thank you. Thank you. Next question comes from Deepak Sonawane from Haitong Securities. Please go ahead. Thank you for the opportunity, sir. Hi. for the quarter- I'm sorry to interrupt you, sir. Deepak, we are not able to hear you. If you can be a bit louder. Hello, am I audible? Yeah. Deepak, we are not able to hear you. If you can be a bit louder. Am I audible now? Not actually. Just a second. Hello. Yeah, much better. Yeah. Yeah. Yeah. Yeah. My first question is regarding cost of acquisition. As you reported, I mean, ad spend and ad and marketing spend for the quarter, I mean, it has declined by 5% quarter-on-quarter. As against our cost of acquisition only for marketing, we have seen a sharp decline, right? It is around 25%-26%. Am I missing something, I mean, in that, decline for the CAC. Yeah. only for marketing? Sure. Our customer acquisition cost does not include the branding expenditure. you know, Yeah, that is the reason. If you, if you look at our overall advertising and marketing cost in our P&L table, that includes marketing, that includes branding. Our CAC doesn't. Yeah. That's why there is a dip. Yeah. The branding, I mean, within our marketing cost that we reported for the quarter, how much percentage will be branding? I mean, of INR 11.6 crore. If you just multiply, the number of customer into the CAC, the branding cost, that will be the actual advertising. The balance would be branding. The actual, for the last quarter, branding was INR 4.3 crore, and for this quarter, it is coming INR 7.5 crore. INR 7.5 crore. That branding is mainly digital, right? Nothing else. Yeah. Broadly, yes. Okay. Okay. sir, within our allied broking income that we have, we have said that majority is interest income on MTF. Do we include interest income on float in the same allied broking income or else in other operating income? That's in, that's a part of our other operating income. What will be the quantum for that? Other operating income, approximately, 90% income in other operating income is pertaining to interest income. Yeah. We've mentioned that INR 15.8 crore for this quarter. Yeah, got it. Sir, reversal, this is one-off, right? INR 17.9 million that you reported for the quarter, the reversal of... Yes. -margin finance debt. Do we see that, again, there could be impact in coming quarters as well? This is the first. These were the penalties which were required to be refunded from October 2021 to September 2022. Okay. That's the reason it was a one-time effect. Post that, these numbers will not come back. That was just, you know, one-time effect. That's it. Okay. Okay. Sir, regarding our CAC again, and that CAC means other OpEx I'm talking about? That has gone up, right? INR 220-INR 269 per new client acquired. That mainly should mainly includes your onboarding team salary, right? That you have mentioned in- Correct. the PPT as well. Yes. Yes. If I see our employee cost, right? Yeah. That is kind of very flat, right? INR 140 million-INR 149 million. Is there any other parameter that is driving this OpEx and cost of acquisition other than marketing? No, actually not. See, the what happens is that marketing, you know, CAC always comes down first for... and that is followed by the OpEx cost. OpEx is more or less people. You sometimes if the acquisition is down, I can't, you know, we can't remove the people. If the acquisition is good, we can't again hire the people. That is a small difference you'll always find in the OpEx, which is non-marketing. That's on the one part. Secondly, you know, on the employee cost, obviously that includes and now a significant part of our employee cost is towards the product and technology team. Because that's a bigger chunk, you know, and that's why, you might see a small, you know, increase here and there, because of the hiring, you know, in the technology and the product space. Okay. Broadly, the reason, the answer to your question of why it has increased is because obviously your people were there in Q2 and Q3. It's just that the number has gone down, so that has an impact on the CAC. Okay. Yeah. I mean, that is highly linked to your new client acquisition, right? Absolutely. Yeah. My last question on CAC is, earlier we reported that our payback period is around 12-13 months. So we are holding this payback period metric even in Q3 as well? No. Actually, our payback period was not 12-13 months. It was always in the range of around 8-9 months. Now it has improved a bit. Now we are in the range of around seven and a half months. Seven and a half months. Yeah. That improvement is for the nine months or is for the quarter? It is for the quarter I'm talking about, yeah. Okay. Okay. Okay. You see that, with CAC hovering around INR 500-INR 600 per new client acquired. Yeah. If you see that the market remains silent, that means our broking income could be remain flat, right? Do you see that the payback period holding up in, again, I mean, next 12 months as well? The seven to 7.5 month, 5.5 months per-. Our internal expectation is that the payback period should reduce further. Okay. Okay. Our target is that we should be in the range of around five to six months as a payback period. Okay. We're working towards that. From 8 - 9, we have come to 7.5. It will come down further. That will be by improving the quality of customer in terms of revenue and not by reducing the acquisition cost further. Okay. Okay. Okay. Yeah. All right. All right. Actually, my last question is on- Thank you. the number of I would request if you can come back because, you know, there would be other people also asking questions. Sure, sure. Yeah, yeah. No worries. Yeah. Thanks. Thanks a lot. Thank you. Thank you. Next question comes from Alok Kumar from UTI. Please go ahead. Good afternoon, sir. Congratulations for the result. Hello? Yeah, hi. Hi. Hi. Yeah. Please go ahead. Yeah, just wanted to know your market share in the derivative market. right now we're in the range of around 3.2%. Okay. What was it last quarter? We were somewhere around 3.12%-3.14%. Okay, okay. Is there a possibility of increasing the broking rates in the coming quarter, probably in the coming financial year? That's a good question. See, the kind of regulatory changes that we are seeing is pushing cost of operating business, you know, higher with every quarter. Now with the changes, I see that the rates, you know, for the discount brokers, at some point will definitely increase. Whether it will happen in the next two quarters or maybe by end of next year, that's something that we need to, you know, see how the changes go. Compliance costs, regulatory costs, you know, operate, other costs have significantly gone up. With, you know, with the acquisition growth getting, you know, stagnating and, you know, markets also now in not a very, you know, high growth trajectory, I think that will put more pressure on the cost. There I see a very high chance of brokerage rates going upwards in a near future. How much is it expected to increase? Like from 20 to what figure are you expecting? It is, it's actually difficult. You know, it's really difficult- Okay you know, to comment. Whether it will be a 10% increase or a 20% increase. It all depends that what kind of regulation, regulatory changes will come in and what part of the income will get impacted. I mean, we have seen that when the markets turn, you know, bad, you know, 20%-30% revenue impact is normal. I mean, because we are a cyclical business. If there are other, you know, changes which may tomorrow impact our treasury income. We'll have to see that, you know, what is the impact and accordingly, it has to be factored in the cost, in the brokerage rates. Sure, sir. Sure, sir. Sir, my last question is, what is the growth trajectory in like in terms of the customer acquisition for the coming year or like, say, coming quarter? Is it expected to go down or is it expected to increase or like remain constant? As I said, that our... we are expecting, you know, our acquisition number to be in the same range. We are acquiring close to 1.5 lakh, 2.25 lakh. That's a broad number. All give and take, close to from, you know, maybe around 7.5-8 lakh customers to 1 million customers. That is the range of acquisition that we are looking at, and I see that we will continue to do that. We'll continue to acquire in this range. This is something that I'm not factoring, you know, the 1.5 million customers that we will acquire from the acquisition. That's separate. This I'm talking about our normal acquisition. Okay. Okay. Thank you. Thank you for your time. Thank you very much. Thank you. Next question comes from Deepak Poddar from Sapphire Capital. Please go ahead. Hello. Yeah. Hi, Deepak. Good afternoon. Yeah. Hi. Hi, sir. Thank you very much, sir, for the opportunity. I just wanted to understand, you mentioned that about INR 7 crore was a one-time expense in third quarter, right? Because of the margin penalty. Yeah. If we adjust that, I mean, our EBITDA stands at about 35%, I mean, EBITDA margin, if we adjust that INR 7 crores, one-time expense in this quarter. Actually, we need to check. Actually, EBITDA, EBIT, that is not a right measure to calculate in our business because our interest cost, I mean, we are using interest cost for the funding group. Our income and expense both are coming. Our finance cost is not for the, I mean, other than operating purpose. It is there for the other purpose. The best way to look at it, our PAT margins. Yeah, that's fine. I mean, let's say PBT. Our PBT, which is about INR 14.7 crores, the adjusted PBT is around- Yes. -twen- That would be around 26% and not 26. Around 26%. no. I got confused. 26% is what? If you remove the one-time expenditure of INR 7.09 crore towards the margin penalty, if you exclude that, then our PBT margin would be around 26%. Fair. I understood. Yeah. Yeah. Which is about INR 21, INR 22 crores. That's right. Right. That's a very sharp jump, from what we have been seeing last three, four quarters. I think our PBT margin went up from 7%-1 2% and then 18%, now 26%. Yeah. How do we see that? I mean, is that a sustainable PBT margin that one should look at going forward? I mean, given the kind of business, I mean, how do you see that? See, I mean, see digital businesses, you know, across always command a high PBT margin in a steady state. Right now we are not into an early startup kind of a phase where we would be into losses. We've just come out of a loss. In a steady state, my target, you know, for a foreseeable future is to be in the range of around 35%-40% at PBT margin. That is what our aim is. If you look at our quarter, we are, you know, in the right direction to achieve that number. Okay. Fair enough. steady state, we are looking at 35%-40%. This quarter was about 26% on an adjusted basis. Yeah. Hello? Yeah. Yes. Hello? Absolutely. Okay. Okay. Great. I mean, this steady state, how many quarters we are looking at to achieve that kind of, I mean, steady state margins? See, what we are and how this 35%-40% of PBT margin will be achieved is obviously we are working on, you know, improving the quality of customers that will increase our ARPU. We are working on, you know, reducing the CAC, which we have already, you know, seen. What happens is that your technology cost and your other fixed costs do not go up, you know, in tandem with the revenue growth. That is how it will take at least, you know, 3-4 quarters or five quarters to reach, you know, to that number. In last year, we had also completed and more or less by last quarter, we have completed our, you know, the investment that we wanted to do in technology. As far as cost is concerned, we are more or less, you know, there in terms of fixed cost. I don't see a much increment in the cost. Now it is only revenue growth. The moment the revenue growth happens and the ARPU grows, our PBT margins will grow. I look at around four to five quarters to achieve that number. Okay. Fair enough. You spoke about the revenue growth part as well. I think- Yeah. last four, five quarters, our revenue has been quite stagnant in the range of 80 plus minus, right? I mean, somewhere around INR 80 crores is what we have been seeing in last five quarters. Right. Now when we say 4-5 quarters to achieve that kind of PBT margin, what is the revenue assumption you're taking there? See, if you look at, I agree that last four quarters our revenue has been stable, there is a reason to it. There are a couple of reasons. One is, you know, in 2021, if you look at our acquisition trajectory, that was on a, on a, at a very high number. We realized that this acquisition, just for the sake of acquisition is not enough because a lot of customers are not trading. We changed gears. Whenever you change your gear from a very high acquisition trajectory to a low acquisition trajectory, it has an impact on your revenue because there's a run rate at which you're growing. Second, that coupled with the market scenario. This put together is the impact that you see on the, you know, on the revenue. Now, with the kind of acquisition that we are doing, we focus more on, you know, quality of customers and derivative business as a whole. I see that the number, you know, will increase. Right now, for me to give you an exact number in terms of what will be my revenue, four quarters down the line won't be, you know, won't be a right way to look at it. Okay. Fair enough. Un-understood. My last question is, right, like our active to gross client ratio, I mean- Yeah. It has been, it had been stable at around 60% plus minus, right? Lately- Right. I think for last couple of quarters, we have seen, a stark decline, I mean, from 60% to maybe what, 33% right now? Yeah. Yeah. So- Absolutely. Is there any effort we are doing there to kind of improve that particular ratio? I mean, do we see that as an important parameter for us to track, right? I mean, higher ratio means more business and more orders, right? Absolutely. Absolutely. Definitely we do our, you know, internally, we run our analytics, and we do a lot of effort in terms of reaching out to customers and activating them. When you see this, you know, the degrowth in the active client, again, that's a factor of, you know, acquisition that you do. This number is basically clients who have traded in 12 months. If I have acquired for 2020 and 2021, that the acquisition number, and suddenly from a 2021 last quarter, Q3, calendar to Q4, of 2022, we saw a net, you know, reduction in our acquisition. That also on a rolling basis has an impact on the active clients. That is why, you know, I was telling to one of the also, you know, call, the analyst that, we should right now not look at active client as a right matrix. Though obviously on an overall base it is important that how many clients are trading. Markets acquisition, change has also impacted the active clients. Maybe for a quarter more that won't be right, it will then stabilize, and you'll see an increase, after two, three months. That's pure statistics, statistical exercise that you can do. Okay. Fair enough. Understood. That's it from my side, sir. All the very best. Thank you. Thank you very much. Thank you. Ladies and gentlemen, if you have any question, please press star and one on your telephone keypad. Next question comes from Sunit Jankar from Motilal Oswal. Please go ahead. Thank you for providing me the opportunity. Sunit, I think we lost you. Am I audible? Sunit Sir? No, we lost you. If you can repeat your question. Okay. My question is, what is current cash market share, and what is the proportion of cash and derivatives in terms of revenue? Sure. Our cash market share is approximately in the range of around 2.7%-2.8%. And our derivative is around 3.2%, that's broadly, you know, our revenue share. But in terms of our revenue breakup, broadly 65%-70% of our revenue comes from derivative and the balance from cash. Okay. You mentioned that you are launching a FnO 360 app. Very good initiative to ask maximum proportion of revenue is coming from derivatives. How do you differentiate like that now current clients are also trading in derivatives? How does this FnO 360 app differentiates from current trading experience for clients? See, as far as platform is concerned, the reason why we created this entire terminal is that people who trade in derivatives are broadly, you know, trading only in that segment, where, you know, rarely and in a very less number of time they come on a normal terminal. We wanted to give a different experience, there are a lot of data points. As far as customer is concerned, there is no difference between the customer trading on our normal platform and FnO 360. The experience on that terminal is much better than a normal because there are a lot of data points that we provide. There are a lot of predefined strategies, you know, lot of types of orders, you know, which typically are used by derivative traders. It is basically to improve the experience. Okay. Got you. Thank you, sir. thank you for- Thank you. -providing me the opportunity. Thank you very much. Thank you. Ladies and gentlemen, if you have any question, please press star and one on your telephone keypad. Next question comes from Tushar Sarda from Athena Investments. Please go ahead. Yes. Thank you. Thank you for the opportunity. This is the first time I'm attending the call, so I'm just trying to understand the business. You talked of quality of clients, and when I divide your broking revenue by the total customer, it comes to INR 100 per quarter per client. I'm just trying to understand, you know, what kind of clients are this, and, you know, if a client is paying only INR 100, why do you have to spend so much money to acquire a client? This is an absolutely right question. That is exactly the reason why we moved away last year from acquiring, you know, a broad customers to acquiring quality customers. As I said, we, you know, we started that journey from January, February, you know, this last 2022. It takes some time to change your course. It's, but if you look at that, if you divide purely revenue by the number of customers, it has many, you know, many factors associated with that. One is that you're looking at, you know, just one quarter revenue, which also or other 4 last two, three quarters, which has a market impact. Secondly, it also, you know, is a factor of a large customer acquisition that we have done in 2020 and 2021. Most of these customers were millennials and young people in the range of 18 to 25. Now, when the markets, you know, become choppy or they turn sideways, typically the kind of money that these people have to invest is very less, and they shy away from coming to market. That's the reason when you divide it by the customer base, you will see a very small number. That may not be right, because if you take the active customers only, then the number will be significantly better. That's the... One more reason. Your presentation doesn't mention active customer, right? I will look at the numbers that you report, and you reported total customers. Yeah, absolutely. Absolutely. Okay. Yeah. Okay. That's the reason I'm giving you the explanation for you. Yeah, maybe you should include that in your presentation, you know, the parameters that one should look at. Sure. Sure. okay. Thank you. Yeah. Thank you. Thank you. Next question comes from Krishnendu Saha from Quantum AMC. Please go ahead. Yeah, thanks for taking my question. This is the first time for me also. Just trying to understand the merge with IIFL Securities, the rationale behind that. We first demerged, I realize, from IIFL Holdings and then IIFL Security. Just could you just explain why are we doing this merger? What is it for? Sure. Excellent. 5paisa Capital was demerged from IIFL Holdings because, you know, then, in the group this new entity was created because to cater to the digital, you know, side of, you know, of the discount broking side of the broking business. That's how 5paisa Capital started its journey in 2015/16. Over the years, what we realized that, you know, a lot of things changed and both the companies were ending up targeting the same set of customers digitally. We were 100% predominant digital, but IIFL Securities had one vertical, which was the digital, you know, trading customer. They also had, you know, other customers, which are typically relationship based and all. That was... that's the reason we decided that, you know, one, there should be a dedicated focus for one, you know, business area or one target segment. That's how it made sense for us to acquire the online retail trading business of IIFL, because that is a customer set which suits our business also. Most of them are millennials and all of them are trading digitally on app. That's the reason, that's the rationale behind acquiring that set of business. Anything on the business front which will enable us to augment our revenue. Could you talk about that please? Sure. As I said, we are acquiring close to 1.5 million customers, which will boost our, you know, base by around 40%. In terms of revenue, we are looking at close to around, maybe 18%-20% growth, in revenues at the current, you know, revenue. Sorry. I mean, let me rephrase the question. Sorry to interrupt you. Any diversification on the revenue front? I suppose it's the same, is it? No, I'm right now not able to hear your question properly. If you can... Sorry. The diversification. Is there a chance that you will be able to sell more products? I mean, from the broking point of view and the margin funding. Yeah. Is there anything else we're getting more? Is there diversification point of view on the revenue stream or it's the same? I'm not aware of IIFL Securities much. Is it allowing us to sell more products to a customer or something like that? Absolutely. We are what we are acquiring is customer and the broking revenue, it also opens up an opportunity to sell multiple products to these customers. Answer to your question is, right, there's going to be an opening up of opportunity to serve the customers. What we are acquiring are customers and the broking business, the broking revenue. I see. The promoter shareholding post the merger. Could you just let me know what will the promoter shareholding percentage be? It will not impact that much. I mean, it was a 32.69% pre-holding. After this it will be 32.45%. Slightly 0.24% decline. I see. Thank you. Thank you for your time. Thank you. Thank you. Next question comes from Sarvesh Gupta from Maximal Capital. Please go ahead. Sir, one question I wanted to understand is, from an industry perspective, you know, we are seeing, variety of changes. Number one is, as you mentioned, that, the industry itself is acquiring 10% less clients in this quarter. Yeah. I think in our case, we are focusing on higher value. We have probably de-grown our acquisition rate at a much lower number, at a much higher number. You know, in terms of the competition, you know, how is it shaping up? Because we have also seen some of the other discount brokers are sort of unable to acquire in the same pace as earlier. If you can throw some light on, you know, within the discount brokerage space, you know, how are things shaping up? Second question is on this regulatory possibility that we hear about wherein the transactions can be carried out from the bank account, which can have an impact on the margin book that you have. If you can throw some light on that and how it will affect your business if it is implemented. Third question is on this IIFL acquisition. You mentioned that it will increase your customer base by 40%, but any sense of the various financial parameters of this acquisition that you can give, like how much you are paying and what's the sort of revenue and EBITDA or PAT increase that it can cause to your consolidated financials after a year? Sure. Talking about your first question, if you look at the competitive landscape, the consolidation in the acquisition has already taken place. Obviously, because of the fatigue and the prolonged, you know, great acquisition numbers, obviously at some point of time there was fatigue to become, you know, to have to come in terms of acquisition, which is right now. Largely if you see that more all the acquisition is consolidated and between 4- 5 discount brokers, a large number, almost 80%-90% of the acquisition which is happening in the discount broking space is happening between, you know, the top four or five players. Over a period of time, what has happened is, you know, it is important that are you looking at only acquisition as a matrix of in terms of competition, or you're looking at deriving more revenue and value out of this. A positioning is extremely important, and that's why, that's how we differentiate ourselves, where we position not, you know, just as a broker who's acquiring, you know, any and every customer. We want to acquire a high intent-driven customer. Though, you know, though there is competition, but there is a consolidation and that consolidation helps us to provide and helps to actually give, you know, grow further in terms of, growing our customer base and revenue. As far as regulatory is concerned, definitely there are a lot of changes which are happening and, you know, there is obviously a white paper and there are consultations happening in terms of, you know, how the client funds can move directly from customer bank account to the clearing corporation. That won't impact our margin funding book or the brokerage, but that will have an impact on our treasury income. I think, you know, as someone also asked that with all these regulatory changes, what exactly will happen? Obviously the cost, when cost goes up, it has to be factored in the brokerage rates. We might and/or we will see an increase in the brokerage rate from the flat INR 20, you know, that most of us are charging. It has to go upwards if we want to run our business and, you know, with every quarter our compliance and our operations and other costs are going up. It will definitely have an impact, but, you know, that will also mean that the brokerage rates and the charges that we charge to customers will go up. Lastly, on your question of the acquisition, we are, as I said, we are acquiring close to 1.5 million customer. Our expectation is that on if you look at our current analyzed revenue, that would, you know, have a positive impact of close to 18%-20% in terms of income growth. As far as cost is concerned, you know, we have already created an infrastructure which can take care of more than 2 - 2.5 x of the customer trade rate and the people logging in and, you know, all the other parameters of for a tech infrastructure. We already created that. As I mentioned earlier also that I don't see a cost increment from here even if we acquire. With an 18%-20%, you know, income, we see a good, you know, translation of that income directly into profitability, you know, once this entire scheme comes into play. How much are you paying for this acquisition? It's an all-equity deal and we are the ratio that we are paying to shareholders is in the range of 50 - 1. For every 50 shares of IIFL Securities, the shareholder will get one share, you know, of 5paisa. If you just convert that is broadly on our total equity base around 60 lakh shares will be issued. Understood, sir. Thank you. Yeah. Thank you very much. Thank you. Next question comes from Dev Shah from Haitong Securities. Please go ahead. Hello. Hi. Am I audible? Yeah, sure. My question to you was regarding the total number of orders that you all have received during this quarter. If possible, could you give me the equity segment orders also for this quarter and the previous quarter? I'm sorry, but we don't share the number of order information for any of our segments. Oh, okay. Okay. All right. Yeah, one more question, relating to the time. For example, do you all have any metric that shows the time it takes for a newly acquired customer to be an active client? Is there anything like that? Yeah. Broadly, what we have seen from our past experience is that it takes not more than 30- 45 days for a customer to get active. If you're acquiring customers, most of them, almost 95% of people who want to trade, will end up trading between, you know, within the first 30-4 5 days. If people do not trade in first 45 days. It is very, you know, unlikely that they will trade ever, or they'll come back. That is like only 0.5%, 1% people will come after 45 days, but maximum it, this is the time. Okay. Okay. Got it. Got it. Last question. Out of these 1.5 million new customers that are gonna be coming in through the merger, through the acquisition, sorry. Could you give me a sense on how many of them will be active customers or currently active customers? See, right now it will be difficult for me to share that information because as I said that we have just, you know, filed it to the exchanges. We are, you know, expecting approvals. Once the approvals and, you know, the shareholder approval, the exchange, and also NCLT, post that, we will be able to share that information. For now, we won't be. Okay. Got it. Okay. No issues. Thank you so much. Thank you very much. I think we can take two more questions, operator. Sure. My last two questions. Next question comes from Anurag Mantri from East Bridge Advisors Private Limited. Please go ahead. Yeah. Thanks for the opportunity. I have two questions. One, on the F&O side, basically you mentioned that your market share is about 3.2%. Any sort of indication as to what you're targeting this number to maybe go up to? You know, what are the initiatives that you're taking? I've heard about your FnO 360, but is there, you know, anything else that you're sort of focusing on to drive this market share? Like is there a cohort of customers, you know, sitting in the overall broking industry, which you can sort of target with your pricing and your offering, et cetera, where, from where you're gaining market share? That's one part. The other part is that, if you can just help us, you know, understand the qualitatively, if you can give us the color of the F&O segment in the sense of, you know, what% of your clients may be doing F&O. Within the F&O brokering AGTO or the revenue, what% you know, comes from these good quality so to say that you define as of now. You know, what% is kind of HNI versus retail? You know, what type of customers like how many customers make money? Any qualitative assessment would be useful. Answer to your first question, obviously, you know, there is no number in terms of what kind of growth I'm looking for in derivative market share because, you know, we put our effort and once you are into acquiring, you know, high-end derivative traders or the good quality customers, sometimes, you know, you immediately get a, you know, a market share rate, but that's why it would be difficult for me to put a number in terms of market share. Having said that, we have done a lot of things for attracting, you know, good quality customers and derivative traders. F&O 360 terminal is one. We introduced a product called MarginPlus, where in that product we provide a 100% collateral benefit for, you know, for customers who wants to trade in derivatives. The 50% component of cash is something which is funded by us, on which we charge a meager interest rate of, you know, 0.03% per day on overnight, and intraday it is absolutely free. We have introduced a lot of, you know, order types, which the traders, you know, like. We have tied up with the fintechs, you know, which provide a lot of tools and lot of data. You know, we have an OpenAPI architecture where, you know, the algo traders or the derivative traders can use our API, you know, to trade. We also have a subscription product. There we charge the lowest brokerage in the industry, where we charge only INR 10, you know, as a part of our add-on pack, which is our Ultra Trader Pack, where you just pay, you know, INR 1,100 on a monthly basis or around INR 10,000 on an annualized basis, and you get, you know, brokerage rate of INR 10, and you also get 100, you know, orders free. From charges to platform to product, you know, to experience, you know, we have done a lot of things to attract these kind of customers and that's how you see a steady, you know, growth in terms of market share over last three, four quarters. Lastly, I think your question was, on the qualitative aspect. See it is, it's again, I won't be able to share in terms of how many people make losses or how many people trade. Broadly, as I was saying earlier also, in last 4 quarters, what I have seen is there is a consistent increase of number of customers trading into derivative segments. Though the percentage of customers who are trading in derivative as compared to my overall is not much, it is in the range of around 10%-15%. Those are the ones who are that overall absolute number is increasing quarter on quarter. It is not just the turnover which increases, but also the customers traded which is increasing. Sure. Thanks. Thank you very much. Thank you. We have a follow-up question from Tushar Sarda from Athena Investments. Please go ahead. Yeah. Thank you for the opportunity again. Couple of times you've mentioned that you expect the brokerage rates to go up. If we look at, you know, the big players like Zerodha or Angels, they are minting money. Would they not actually reduce the rates to drive out other players from the markets because the competitive intensity is increasing in this space? No, I don't see that brokerage rates are headed south at all. See, there are profitable players in the business, but we all have to, you know, understand one and a couple of facts. One is broking is a cyclical business. Last two and a half years have been, you know, good for markets. We have seen in the past, and I'm in broking business for last two decades, I've seen that, you know, overnight with any change in the market, you can lose almost 30%-35% of your revenues. If you are profitable now doesn't mean that you'll be profitable ever just by reducing the rate. That is one. Secondly, there are regulatory changes. Treasury income are definitely you know, part forms a significant part of the rather less of a top line, but a significant portion of bottom line. If there is any change which leads to erosion of the treasury income, automatically have an impact on the profitability. I think, you know, us and overall, the large brokers understand the gravity of, you know, the business and the cyclical nature of the business. I don't see, despite so many players coming into it, the rates, you know, will go down. There might be marketing ways through which you bundle a product and you're trying to position as the cheapest, you know, by giving a lifetime something or maybe, you know, you reduce the rate and then you park. It's more of a marketing. All put together, I don't see the rates going down. They won't go up also, right? These players are hugely profitable and everybody's fighting for market share. It's like a telecom battle which happened between the biggies and the smaller players, just couldn't survive the price war, right? I mean, you're. I think- -been mentioning that the rates could go up, but I seriously doubt if they'll go up- Right now I think- They'll make so much money. See, I... Right now it's more of an, you know, a hypothetical situation. you know, obviously, when we look at, you know, lot of parameters of business, I mean, that's my call. I may be wrong. I'll be happy to prove wrong that, you know, if we are able to maintain or rather increase our margins on an ARPU by keeping the rates same, I'll be more than happy. you know, we are into a very dynamic, you know, business, so anything can change. you know, my response was to the answer in terms of what if there are changes. you know, in a steady state, I don't see a change, you know, in last two years and even now. Okay. Okay, thank you very much. Yeah. Thank you for answering the question. Thank you. Thank you. There are no further questions. Now I hand over the floor to the management for closing comments. Thank you very much, all for attending, our conference call. If there are any questions, you can write to us at ir@5paisa.com. I again wish you a very, very happy new year and may you have a great year ahead. Thank you very much. Have a good day. Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. Thank you for your participation and for using Chorus Call's Conference Call Service. You may disconnect your lines now. Thank you and have a pleasant evening.