ETMarkets Smart Talk: Stock broking industry a structural growth story, says Upstox Co-founder Shrini Viswanath

of 1 crore customer base, has now set up an ambitious target of 20-30 crore customers in the next 4-5 years.

Edited excerpts from an interview:

How has been your growth rate in terms of both revenue and addition of new customers in the last 2 years after Covid hit us? Has the growth been below or above your expectations?
People were looking for new methods to diversify their portfolio and create new streams of income as the pandemic hit. To diversify their income streams, more and more individuals turned to the stock market.

At Upstox, we grew 3x year-on-year (YoY) in terms of customers as well as revenue over the last few years.

Customers trust us and recognise the value of our cutting-edge technology and hassle-free investment process, as seen by our exponential growth. We recently onboarded 1 crore customers and by the end of FY23, we want to grow 3X. In the next four to five years, we want to onboard 20-30 crore customers.

How has been the addition rate of new customers in the last few months when equity markets have not been performing as well?
Year-on-year, India’s stock market has outperformed most major economies. Even though there has been slight volatility in the market of late, it hasn’t really impacted customer growth. Also, smartphones and low-cost data have propelled investing and trading into the digital realm. Opening a demat account has become a paperless and simple process thanks to the implementation of eKYC and Aadhaar eSign. Also, the excitement of upcoming IPOs has piqued the curiosity of first-time investors, resulting in a steady increase in equity participation. At Upstox, out of our total customer base, nearly 70% are first-time investors.

Last month, BSE had said that the registered investor accounts in India had touched the 10 crore mark. In case if we witness a bigger selloff in the days to come, do you think that the rate of addition of new customers will slow down in the entire industry?

Equity participation in India currently stands at 5-6% compared to the US which is about 55%. Having said that, the Indian broking sector will continue to grow even if there is a slowdown. India is a country with a high saving rate, and thus there is immense investing potential. With growing financial awareness, financial literacy, internet and smartphone penetration, many people have started showing keen interest in the equity markets, and are looking at diversifying their investment portfolios. There has also been a lot of enthusiasm for IPOs.

The discount broking industry is also becoming increasingly competitive. Where are we headed? Do you see more disruption ahead with the entry of newer players?

India’s brokerage industry is vast, dynamic and continuously on the lookout for new opportunities. With equity participation in India being around 5-6%, there is still a lot of potential for brokers to flourish in India, and we’re working hard to change the way Indians invest.

Some traditional full-scale brokers are also trying to enter the discount broking space. Do you think they can offer you some serious competition?

In India, we need to grow financial services, find new ways to do so, and develop new business models. For that, we’ll need more competition. Competition is great because it encourages creativity and drives us to provide our customers with innovative products and solutions. We are inspired by what our peers are doing in this field.

Over the years, technological advancements and significant shifts in market structure have fueled a revolution in India’s broking sector. With cutting-edge technology at the core of Upstox, a futuristic approach and constant innovations, we provide a competitive edge over the traditional brokerages. It has emerged as a critical differentiator in a highly-competitive market that helps brokers like us to continuously create value for our customers.

Do you see the broking industry as a cyclical story (depending on the mood of the market) or a structural one given that there is so much of under penetration at present?

Given the under penetration, I would say, the growth of the industry is structural. It can be cyclical in the short term to medium term because of market volatility; but in the long term, the only way is up. More financial literacy, more well designed products, more innovation in this space, will all lead to strong growth.

What is your view on newbies taking keener interest in the options market? Is it a healthy trend?

It’s interesting to observe an increasing number of traders interested in the options market, which can be attributed to increased accessibility and understanding of the advantages they provide. By the way, this has been going on for a few years now. I think it is a healthy trend, if it’s combined with the correct educational content and well designed products that educate and nudge customers to make the right decisions and place the right bets. It provides the opportunities and risks that investment products inherently carry.


Given that retail interest is growing in the Indian stock market, do you think that soon enough retail would have a bigger influence on Nifty’s movement than FIIs ?

I do hope so. Individual investors are on the rise in India, as part of a broader shift away from traditional safe havens such as gold and real estate, as well as bank accounts. The number of active demat accounts in the country has already jumped 63% to 89.7 million in the financial year 2021-22. Higher levels of financial education, the accessibility of information on the internet, and the availability of financial tools at everyone’s fingertips are all contributing to the present wave of change in the Indian equity market, which is booming.

The rise of equities markets mirrors India’s growth story, and the true success story for India would be when retail investors, rather than FIIs, have a greater influence on the market. That is also when the average Indian can benefit from the wealth generated by the strong performance of Indian companies.