HDFC Sky Takes on Zerodha and Groww with All-in-One Investment Platform

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In response to the growing trend of increased retail participation in the Indian stock market, HDFC Securities has introduced its discounted broking app, HDFC Sky. This move follows the rising popularity of new-age broking apps like Zerodha, Groww, and Upstox. Dhiraj Relli, the Managing Director and CEO of HDFC Securities, describes HDFC Sky as an all-inclusive application.

The HDFC Sky app offers a comprehensive range of financial instruments, including Indian stocks, exchange-traded funds, mutual funds, futures and options, currencies, commodities, IPOs, and global equities, all accessible through a single fintech platform, as per the official press release.

HDFC Sky enters the market at a time when online brokerage platforms like Zerodha, Groww, and Angel One collectively dominate around 50 percent of the market share in terms of active clients. These platforms have revolutionized the landscape of financial market participation, reducing costs and expanding accessibility. Notably, Zerodha and Groww are the leading players in the online discount broking sector, boasting a significant market share.

PhonePe also recently entered the stock broking business with the launch of its subsidiary, PhonePe Wealth Broking, and the introduction of a new mobile application called Share.Market.

Zerodha, established in August 2010, revolutionized the brokerage industry by introducing flat fees for intraday and delivery trades. Despite not being a pure-play zero brokerage platform, Zerodha has amassed approximately 6.3 million active users as of August 2023, according to NSE data.

In contrast, Groww, which began in 2016 as a mutual fund investment platform, expanded its services to include stock trading as a discount broker, attracting a large user base. In 2020, Groww further diversified its offerings with digital gold, ETFs, intraday trading, and IPOs. As of August 2023, it had 6.2 million active users, with significant user growth in recent months.

Zerodha reported FY23 revenue of around Rs 6,875 crore, with a profit after tax (PAT) of Rs 2,900 crore. In the previous fiscal year, FY22, the company recorded revenue of Rs 4,964 crore and a PAT of Rs 2,097 crore. Zerodha manages an impressive overall asset base of Rs 3 lakh crore, solidifying its position as the largest retail-focused broker.

In FY22, Groww reported total revenue of Rs 427 crore but incurred a loss of Rs 239 crore. In October 2021, Groww successfully raised $251 million at a valuation of $3 billion to support its geographic expansion and bolster its team.

In terms of account charges, Zerodha charges Rs 200 for opening a trading account, while Groww offers free account opening. Additionally, Zerodha's Demat Account AMC costs Rs 300, whereas Groww's Demat Account AMC is free.

During the launch event, Dhiraj Relli, CEO of HDFC Securities, emphasized the all-in-one nature of HDFC Sky as its differentiating factor. He claimed that no other fintech platform in India offers such comprehensive features in one place. HDFC Sky targets Gen-Z, millennials, and new-age investors, distinguishing itself from HDFC Securities, which limits demat account access to HDFC Bank customers.

Relli also shared plans to introduce Government of India bonds and debt securities on the platform and stated that BSE's futures and options segment would go live in the coming month. However, HDFC Securities did not disclose specific market share targets.

Currently, HDFC Securities holds slightly over 3 percent market share among NSE active clients, while Zerodha and Groww both have significant market shares of 19.4 percent and 19 percent, respectively.

HDFC Sky boasts several unique selling points (USPs), including in-house research providing stock recommendations, target prices, and detailed financial performance explanations. The app also ranks mutual fund schemes based on their performance to assist investors in making informed choices.

Another notable USP is the margin trading facility (MTF), allowing investors to purchase shares by paying only a fraction of the total transaction value, with the remaining amount funded by the broker. HDFC Sky offers a competitive 12 percent interest rate on MTF, compared to the 18-21 percent charged by competitors. Investors can conveniently monitor their MTF holdings through a separate ledger.

The launch of HDFC Sky coincides with the cautionary stance of the market regulator, Securities and Exchange Board of India (SEBI), which has been warning investors about potential losses in the F&O segment. To address this, HDFC Sky incorporates various "caution nudges" for traders.

Meanwhile, the National Stock Exchange (NSE) is considering extending F&O trading hours with an evening trading session from 6 pm to 9 pm, supplementing the regular trading hours of 9:15 am to 3:30 pm.