Good afternoon, ladies and gentlemen. I'm Felicia, moderator for the conference call. Welcome to 5paisa Capital Limited, Q1 FY24 earnings conference call. We have with us today Mr. Narayan Gangadhar, CEO, 5paisa Capital Limited; Mr. Prakarsh Gagdani, Whole Time Director and CBO, 5paisa Capital Limited; and Mr. Gourav Munjal, Whole Time Director and CFO, 5paisa Capital Limited. As a reminder, all participants will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during the conference call, please signal an operator by pressing star and then 0 on your touchtone telephone. Please note, this conference is recorded. I would now like to hand over the floor to the management. Thank you, and over to you. Hi, everyone. Good afternoon, and welcome to our Q1 FY 2024 earnings call. On the call, I'm joined with Mr. Gourav Munjal, CFO, Mr. Prakarsh Gagdani, CBO, and my management team. The Indian market has been outperforming the global markets, even amidst the global headwinds arising from the U.S. Fed, indicating successive rate hikes and the ongoing Ukraine war. While the market growth this quarter was at 5.4% and the total Demat accounts opened across the country declined, both the benchmark indexes, indices, BSE SENSEX and Nifty 50, have climbed to their all-time high. All these positive sentiments are expected to drive growth in Indian capital markets, which now has more than 12 crore Demat accounts. We strongly believe that the Indian markets are poised to grow further with advances in technology and the availability of trading products across the country. At 5paisa, for the past year, we have been focused on acquiring quality customers. We are glad to report strong growth in our retail ADTO segment. Our overall ADTO for Q1 FY 2024 jumped by 17.9% to INR 2.84 trillion, versus INR 2.41 trillion in Q4 FY 2023. Our retail market share jumped almost 9.6% to 3.3% from 3.01% in Q4 FY 2023. We attribute the growth in ADTO to our continued focus on customer quality and product experience. Our overall revenue stands at INR 84 crore for Q1, with a 1% year-on-year improvement, which factors in less trading days in April and a decline in MTF book due to changes in the financial year. Our PAT stood at INR 14.5 crore, and margins increased to 17.1%, owing to cost optimization measures, resulting in 97% year-on-year and 0.7% quarter-on-quarter growth in the PAT. We added 1.08 lakh customers in the previous period, achieving best-in-class payback of approximately four months. Over the past years, the regulatory body has worked tirelessly to make investing accessible and safe to all Indians. In this context, I would like to highlight two key circulars recently released by SEBI. One is no bank guarantee shall be created out of client funds by stockbrokers, and the second is a mandate to compulsory upstream all client funds received by brokers to the clearing corporations on a daily basis. While these changes have an impact on working capital, we welcome both changes and believe it provides further protection to investors of the country. 5paisa is at the forefront of tech-enabled disruption in the equities ecosystem. We continue to invest in our engineering systems, improving reliability, speed, and performance. We ended this quarter with an all-time high system availability of 99.4%. We are thrilled to report that our latency has improved significantly by over 30%. These enhancements have had positive impact on trading activity and volume throughout our products. A few quarters ago, we launched a innovative trading platform, FnO 360, that caters to needs of all types of traders, but especially focuses on option traders. This quarter, we introduced a range of features, including FnO Stats, open interest data, advanced option chains, futures and options, screeners, India VIX, and more. Traders no longer need to visit multiple platforms for data analysis, as they can now perform complete market analysis and place orders directly on our platform. These features have been well received by the community, as seen by the rising ADTO numbers. Over the few previous quarters, we have firmed up our digital playbook for customer acquisition and investments. In the coming quarters, we intend to responsibly scale our acquisition channels while continuing to build efficiency by building new digital tools, frameworks, and processes. We will continue to invest in technology and launch innovative products for our 3.6 million strong and ever-increasing customer base. With this, we would like to open the meeting to any questions. Thank you very much. Thank you, sir. 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. Ladies and gentlemen, if you have any question, please press star and one on your telephone keypad. 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. The first question comes from Deepak Poddar from Sapphire Capital. Please go ahead. Hello. Hi, Deepak. Please go ahead. Yeah. Hi, thank you very much, sir, for the opportunity. Sir, I wanted to understand, first up, we are speaking about the investment for a better technology platform and even for the acquisitions, right? What sort of investment here we are talking about and how can it impact your margins as such? The investments are going to be both on people as well as products. We will strive to run the company at the current profit margin levels, which is currently at around 17%. We expect that over the coming quarters we will continue to scale up those, our technology and product investments as well. W hile that could impact the margin, overall, I do expect us to be within the range that we are in right now. Around 17% is what, in spite of. That's our target. Higher investment- Yeah. that's what we might be looking at, right? Correct. We have in terms of, I mean, absolute amount, what sort of investment we are looking for? We don't disclose that data, and, you know, obviously, there are sensitivities involved in disclosing that. You can look at our. We have presented a detailed, you know, in the P&L. You can see a detailed breakdown of the current cost structure and, understand where we are at today. Okay, understood. Sir, can you provide the data in terms of the client addition? What is the client addition cost in first quarter? Yeah. Again this is information again that we don't disclose because, there is a digital ecosystem in place that we are currently part of. Also, we have built our internal systems in a way to ensure that we have a payback period of around, you know, four months. To that degree, we don't disclose the cost of our acquisitions or anything as such, because it's competitive. Earlier you used to disclose, right, in terms of what was the breakup between the client addition cost and the fixed cost, right? Correct. That's a decision we have taken, that I have taken now, is that going forward, we don't want to disclose that. Understood. What is the number of active clients we have as of in this first quarter? Out of the, I think, one gross client of 3.6 million. We have active client approximately in the range of 30%-35%. Three, zero, 30% - 35%. Yes. Yep, yep. Understood. Then, I mean, what sort of client addition growth we are looking at, I mean, as we move forward? See, as of now, as you have seen, right now, the industry itself is degrowing. As we have seen that there is, our focus continues to be on acquiring high-quality clients. We have built a lot of efficiencies in the system. Obviously, as we scale, we will be looking at, you know, at building the processes to a point where we can grow in double digits from here on out. This is all we can say at this point. As you can see, we have operated with a very high level of efficiency, and over the past year, a lot of investment has gone in hardening our digital playbook, digital tools, digital frameworks. We have believed we have hit a point where we can now start scaling those investments. We will be doing that responsibly, as I mentioned in the call. You can assume, you know, anywhere in, you know, anywhere from 10%-15% is what we will initially start, and then kind of scale up from there, you know. 10%-15% quarter and quarter, right? 10%-15% over what we are doing today. Yeah. Yeah, that's quarter-over-quarter, right? Yeah, yeah. Yes, yes. Yeah. Okay, understood. Yeah, I think that's it from my side, sir. All the very best. Thank you. Thank you. Thank you. Next question comes from Chetan Shah, from Systematix. Please go ahead. Yeah, hello, sir. I just have one question. Hello. Yeah, can you hear me? Yeah, yeah, we can hear you. Yeah. I have just one question. The client acquisition has been coming down month-on-month or quarter-on-quarter. Yeah. The cost reduction, is that anywhere relevant, we are incurring lesser cost in, like, client acquisition? I know you don't give the number now. Yeah, yeah. Is that understanding correct? Yeah, yeah, absolutely. By the way, I see we have been deliberately pursuing the strategy to acquire customers at the rate at which we think we can turn them profitable. It's not that there is any, that there is nothing preventing us from scaling that playbook, because it's always easy to scale that. The question is, can we do it while holding our underlying business fundamentals, operating the business at a certain healthy OPM level, and also keeping decent levels of payback period? That's the short answer to your question is yes, that's how we are looking at our long-term plan. Okay, got it. Thanks. Yeah. Thank you. Thank you. Ladies and gentlemen, if you have any question, please press star and one on your telephone keypad. Next question comes from Karthi Keyan, from Suyash Advisors. Please go ahead. Yeah, hi. Good afternoon. couple of clarifications. One is your other expenses are around INR 41 crore. I'm assuming this is a combination of lower customer acquisition cost. you know, so just wanted to understand how to think about this number going ahead? Yeah, can you give them one second? Our expenses was approximately in the range of INR 45-46 crore in Q4. Right. It reached to INR 49 crores because there were some exceptional items came in Q4. Right. In this quarter, INR 45 came to the INR 41 crore, which is majorly pertaining to the advertisement and branding cost. Right. Overall, the reasoning, I mean, the reasoning of INR 9 crore reduction is the 50%-60% is advertised on IT cost, and the rest 50% is office and admin expenses. Right. Okay. Sure. Thank you. Let me get back with you. Thank you. Thank you. Thank you. Ladies and gentlemen, if you have any question, please press star and 1 on your telephone keypad. I repeat, dear participants, if you have any question, please press star and 1 on your telephone keypad. Next question comes from Karan Bansal, from WestBridge Capital. Please go ahead. Hello. Karan Bansal? Yes. I just wanted to ask on the non-broking revenue part. How is the trend been for non-broking revenue in the past year? Our cross-sell is contributing 7%, and other income is contributing approximately 18%-20%. All the other income is majorly pertaining to pre-broking, because once the broking is down, then ancillary income related to the, you know, AMC, DP, it's also went down. I can conclude on this that approximately 20% is other income and 80% is broking and related income. Understood. The mutual fund income that will be coming in, that will be placed in other income, right? The mutual fund area that is there with SIPs. It is coming under the cross-sell income. It's coming under the cross-sell income. Okay. Yes. How much will that comprise of the total cross-sell income? We don't share this number, actually. Okay. Okay, sure. Also, do you have any plans of going for physical presence also, like an omni-channel approach? I didn't understand. What's the question? Do you have any plans for an omni-channel approach? See, as a part of the long-term strategy, yes, that is one of the options that we are considering. Mm-hmm. It's not like a part of our full playbook as of this yet, because there are many issues scaling that channel in, especially for digital businesses. Yes, it's something that we are considering, but nothing that we can talk about as of this point in time. Okay. Yeah, yeah, that's it from my side. Thank you. Thank you. Thank you. Next question comes from Rishikesh Oza, from RoboCapital. Please go ahead. Hi, sir. Thank you for the opportunity. My first question is with respect to the cost structure. Like you, can we say that, you know, the current cost structure will not go up, like, the current cost base that we have of around INR 65 crores, will that remain more or less constant now? See, I think that's the wrong way to look at it, okay? We are a growth business. There is no point in continuing to hold up cash if we are not going to fuel growth. We are in the business of long-term acquisition, long-term customer growth, and building a story to bring customers on our platform. Obviously, our costs will scale. The important thing there is that our revenue will also scale, and some of those will be seen within the first year, some of those will be seen in subsequent years. Our focus is now that we have built a good foundation on the business side, we have to continue doing some more investments on the technology side and then scale the business much faster than, you know, than the rate at which the market is growing. That is really our benchmark, because we believe we have the best product today that we can bring to the masses. That's really how I look at it. Okay, okay. With respect to the customer acquisition, like, did I, like, hear you correct, that, you said 15% growth quarter-on-quarter? I was just giving an indicative number. I'm just giving you an indicative idea is that generally when digital businesses start scaling up, they don't go 2x, 3x overnight. You know, I'm giving you a general framework that generally speaking, if you look at most digital businesses, you know, then every quarter-on-quarter, they plan a certain rate at which they want to grow. We have picked this number. Obviously, it could be higher or lower, depending on how our tools and processes scale up. We will kind of make that call depending on market conditions and our strategy also. That's the indicative number, just to, you know, give you a sense of how we are thinking. Okay. With respect to the revenue growth, should that match with the customer acquisition growth, too? That may not be necessarily true. In general, yes, it will. In this, as we scale the business side, as I told you, we have been running with a very high level of efficiency. In fact, we are running with the highest level of efficiency of almost any broker at this stage, because our turnaround CACs are hardly within three to four months. Clearly, there is a lot of leg room. Now, some of it may translate to new incentive schemes, new business schemes, which we may introduce, which may not give us immediate quarter-on-quarter revenue, but they will optimize the customer for long-term value. That said, we are looking for a healthy split, where there's a good chunk of revenue which is realized within the first year, and subsequent ones which build on to our latent customer base, you know? Okay. Okay, got you. No problem. Thank you. Yeah. Thank you. We have a follow-up question from Karthi Keyan from Suyash Advisors. Please go ahead. A couple of follow-ups as I get started. Sorry. first is, you know, it's very impressive that you've been able to shrink payback to just four months. This, you know, even significant considering a few months, a few quarters ago, we used to talk about eight, nine months and so on. can you talk about how you are able to curate so well, especially in a complex environment to... You know, from a broking business point of view, can you share some details on that? Yeah. Secondly, could you share some dope on the attrition that you are seeing, both in terms of customer-level activity and also customer base? Both of these. Some thoughts on both these will be very interesting. Absolutely. We have, Prakarsh, who is our Chief Business Officer. I'll let him comment on this. Prakarsh, over to you. Yeah, hi. Talking about your first question regarding how we are able to get the CAC, the payback into less than four months. Yes. Now, if you see for last two quarters, we have been, we've been saying that, you know, we are focusing on acquiring quality of customers. Now, when you are actually acquiring customers who are genuinely interested in trading, then automatically, the revenue per customer that you get from them is higher. Most of our acquisition today happens either organically or through word-of-mouth or reference. These are high-quality customers. Because they are coming organically or through a word-of-mouth, our paybacks, you know, have significantly reduced almost by a half. We were in the range of eight to 10 months. I think it's a combination of focusing on quality, getting more organic, and high revenue-generating customers, especially on our derivative platforms. What, what are they migrating from? Away from, that is to say. Sorry? Whom are they moving away from? I mean, what I'm trying to understand is why would they migrate towards 5paisa, and what is pulling them to? That is the question. First of all, it is difficult to actually, you know, comment on whether they are migrating, because we get, even today, almost, you know, 60%, 65% of the customers that we are acquiring even now. Mm-hmm. The balance 35%-40% people are existing to the market and they are coming. It is difficult to actually say that whether, you know, we are acquiring or rather, we are acquiring from competition or people are migrating from one competitor to another. Right. Because if you look at it at the exchange level, the overall turnover are going up. It may happen that the same customers are increasing the volume at multiple brokerages. Sure. I mean, Yeah, fair. I n fact, you touched upon the point I was thinking about, which is controllables from your side, and I was really asking in the same context. How much of this is the market volume driven and how much of this is, you know, quality- Yeah. -approach? I should add one more important point, which Prakash alluded to, is see that, if you look at the existing players in the market, right? We have, hands down, one of the best FnO platforms in the industry. Right. Ever since we launched the FnO 360 platform, which is like a beacon for, you know, for most, for most of the Indian digital space, because if the maturity of the platform is absolutely. It's far more feature-richer than even the next best competition. Sure. Obviously, as we have built that and we scale that, we see that customers who may have multiple accounts, nothing stops them from having multiple accounts. Right. They come and try our platform, and gradually, the stickiness builds up. it's exactly what Prakash said. It's a combination of both strategy on the business side as well as investments on tech, which is, which is, where we are at, you know? Interesting. Very interesting. I hope you continue doing well. Best wishes. Thank you. Thank you. Thank you. Ladies and gentlemen, if you have any question, please press star and 1 on your telephone keypad. I repeat, ladies and gentlemen, if you have any question, please press star and 1 on your telephone keypad. Ladies and gentlemen, if you have any question, please press star and 1 on your telephone keypad. Next question comes from Neman Doshi, from Motilal Oswal. Please go ahead. Hello, am I audible? Hello. Yes. Hello. Yes, you are audible. Yes. Yeah. My question was regarding the revenue growth. Sorry, I missed your earlier commentary with regards to it. Can you just repeat with respect to we have seen a growth in ADTO, but the revenue haven't translated during the quarter, being markets reaching all-time high and the broking revenue was down QoQ by 7%. Your thoughts on the, on the same? Okay, there's a couple of things, right? I mean, as we build the business, we are trying to get customers who can stay with us for the long haul. As customers come onto our platform, we introduce schemes which let them run, you know, different types of revenue strategies, and that lets them bundle their offerings in a way that incentivizes them to learn the platform and obviously continue to scale with the platform. There is never, almost never a one-to-one correlation between ADTO and revenue, you know. What we do see is that as the quarter has progressed, more ADTO participation tells us that there are high-quality customers who are coming and trading more on our platform. Now, whether it is in, whether they do one order or 10 orders or, you know, or how they slice or dice, that is entirely up to the strategies they pick. That's the result, that there's really no direct correlation between 1 number and another, you know. When we look at a long-term story, however, what we do see is that the customer participation that is reflected through ADTO continues to rise, and obviously, that also has direct implications on, you know, on how we turn the customers active and how many of them end up being revenue-generating for us. Okay, got it. And secondly, on your margin trade funding books, that has also declined. Any reason for it? Yeah. Gaurav will answer that. Actually, we have seen in past and as per the industry standard also, most of the, you know, the investor who, I mean, get the MTF facility, close their position in the month of February or March because of the end of the financial year. Then, you know, they restart the position in the month of May, June, and, I mean, they build up from July to August. We are pretty sure that we will regain the market share in that in future. Most, I mean, the main reason is due to financial year-end. Okay, got it. Got it. Thank you. Thank you. Thank you. We have a follow-up question from Rishikesh Oza from RoboCapital. Please go ahead. Hi, thank you for the follow-up. I have just one more question. In earlier few quarters back, you were talking about, you know, steady state, PBT margins of 35%-40%. Just wanted to, you know, get a broad sense of, by when can we see some sort of margin? Yeah. See, what was communicated earlier is basically where we want to be operationally, and then that's a nice aspirational target to have. We are committed to that eventual playbook. You know, we are committed to that eventual mix. We obviously want to run the business at that. Now, as we said, as the quarter-on-quarter, as we have seen through the progression of this year, there was a period where there was nobody in the market three quarters ago. The trading was literally, it was dumb. As people have started coming back to the market, we have to continue investing more, and obviously, that is going to have an impact on how we on our, you know, on our overall margin number. Now, overall, what I see is that that is the North Star for us. We want to get to that number. Our two, the framework we want to keep operating for our company at, is we want to keep the overall PAT between the 15%-17% number that we are at today. That represents overall healthy business, and that results in a PBT number of in the mid-30s as well. That's how we are looking at scaling the business from now on, you know. At some point, obviously, as we continue to hit critical mass, we will build those efficiencies at scale, which will obviously drive up our margins even further, you know. Okay. Okay, no problem. Thank you. Thank you. Ladies and gentlemen, if you have any question, please press star and 1 on your telephone keypad. We have a follow-up question from Neman Doshi from Motilal Oswal. Please go ahead. Yeah, thanks for the follow-up. I had one question regarding our market share. Our market share has remained in mid-3% for, with respect to retail market share when we see. how do you... Right. -see this shaping up? With respect to customer acquisition also, this quarter, we have seen the overall Demat additions have been pretty good, not that bad as compared to 2023. Right. How do you see this customer acquisition shaping, in the coming years, throughout the year? Yeah. I mean, over the coming quarters, we are going to be aggressively investing both in scaling both the market participation as well as in scaling our acquisitions. This is what, you know, we have discussed in the call, right? Now, obviously, we have to do it very responsibly, right? We want to strive to stay between the 3 to 6-month kind of payback period. Right now, we feel we are rightly positioned to continue scaling. You should expect that these acquisition numbers- Right. Eventually the ADTOs will correspondingly shape up according to that. Okay, okay. Is it fair to say that company still is in investing mode and the future benefits are yet to show up? Yeah. Okay. That is 100% correct. Yes. Okay, got it. Thank you. Thanks a lot. Thank you. Thank you. There are no further questions. Now, I hand over the floor to the management for closing comments. Yeah. Thank you, everyone, for attending the call. If there are any further questions, please direct them to ir@ 5paisa.com. We look forward to meeting all of you again next quarter. Have a wonderful day. Thank you, sir. Thank you. Ladies and gentlemen... Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you, and have a good day.