It seems a new future competitor coming soon…
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The current strategy of Zerodha maintaining a large platform with limited resources is unsustainable in the long run. To truly achieve growth, Zerodha need to prioritize innovation, intuitive UI and provide adequate support. We’re seeing evidence of this with Zerodha losing ground to Groww.
Here’s why Groww is resonating with Indian investors:**
- Focus on Mutual Funds: Indians favor mutual funds over individual stock picking.
- Customer Journey: Groww prioritizes mutual funds first, helping customers build confidence before introducing them to trading. This is a stark contrast to traditional brokers who prioritize trading.
By adapting a similar approach and investing in more resources to drive innovation and support, Zerodha can capture a larger share of the Indian investment market.
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Is AngelOne growing faster than Zerodha? Perhaps Zerodha should consider advertising as well. They will be doing the world a favor, by saving people from joining an unethical & inferior broker.
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Kindly elaborate more as on what grounds AngelOne is an unethical broker.
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I will list a few issues that I have encountered in the past few weeks:
- They called me and encouraged me to trade options. When I expressed my disinterest, they offered to teach me options trading.
- The app requested permissions for SMS and contacts for reasons that seemed suspicious.
- My friend started receiving spam calls about trading the day he registered with AngelOne. It could be a coincidence, but I have my doubts.
- There were frequent technical glitches, and they failed to acknowledge any problems.
- Encouraging their users regularly to use MTF (Margin Trading Facility). In other words, take loan to trade. Dangerous.
These are the reasons that came to my mind; there might be a few more points I have forgotten.
From my perspective, I would consider Angelone’s practices to be unethical. This viewpoint may stem from the high standards I’ve come to expect from brokerage firms, particularly after my experience with Zerodha.
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Yes they are very unethical. I have read the spam calls immediately after registering for Angel One somewhere else too.
This is also there. They literally ask you to share all SMSes + access your credit report
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Same here. Even I have never given permissions. I deny everytime they ask. Still I have started receiving spam calls and SMS. I dont know who leaked the database.
Zerodha zindabad.Even MTF policies are bit confusing. Not easy to handle.
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Thank you for letting us know these things. I was thinking of opening an account with Angel One but now I don’t think I would. In ethics, Zerodha for sure is far ahead of the competition.
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Just to add a little more here. They generate MTF request every day and then send us mails and msgs to accept it.
I have same pan registered in both zerodha and angelone and I have to be so careful when I accept pledge request which I requested from zerodha. If I click on select all, I would even get MTF facility.
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Could you explain this? Did they generate this without you asking for it?
Every single day they do it. Every day.
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Maybe try filing a complaint on sebi scores. If you have the time
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Initially,
Could you provide the definition of “unethical”?
In your opinion, which broker do you consider the most ethical in India?
Groww/ Zerodha/ Angleone/ Dhani or anyone else?
Personal Opinion : Angleone 
Too much Spam and indirect force to move towards MTF
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While I appreciate Groww app for its simplicity, it is disheartening to see our favourite broker Zerodha fall behind competitors due to obvious reasons.
Back in the days when the Coin app was introduced, many feature requests were turned down simply because their coin team is too small to handle them. Even now, one could see they are struggling to implement features like STP despite the promises made long long ago. There is no point bragging about a small team size if it’s unable to scale up and maintain agility and innovation. Rather than leading the way, Zerodha appears to be playing catch-up.
There is huge potential (and even responsibility of Zerodha) to bring many investors to Indian stock market. The best way is via passive investing. It is great to see that they finally realised it and introduced Zerodha Fund house in late 2023. (Their first LargeMidcap 250 Index fund’s success is a testament to that and clearly shows the demand).
Building on this momentum, perhaps they could create a simple app like “Zerodha Lite” for new investors with minimal/no account opening & AMC charges that offers basic features and intuitive UI. Imagine if Zerodha Lite would act as a one-stop shop, consolidating information from Kite, Coin, Console, etc., providing a clear view of a user’s portfolio instead of switching multiple applications.
Zerodha could learn from “growwing” competitors strengths and offer even better features and user experiences.
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What if Zerodha does not want to be the largest brokerage firm in India? They might want to be in the top 5 or 10 firms. It’s what they want not what we want them to be.
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Groww, Upstox, Paytm money have cumulative net losses since their inception.
Groww has turned positive since FY20-21 but is yet to cover the accumulated losses. Moreover, the shareholding of groww is quite fragmented and the founders do not own a sizeable share of the company.
In Angel one, the promoter shareholding is 38.21% and the FY24 net profit is RS 1126 Crore. So, the share of net profit attributable to promoters is rs 430.2 crore.
ICICI Securities net profit for FY24 is s 1697 crore and promoter shareholding is 74.73%. So the share of net profit attributable to promoters is 1268.1 crore.
Kotak securities made 865.22 crore in FY23 and the promoter holding is 25.90%. So the share of net profit attributable to promoter is 224 crore.
HDFC Securities FY23 Net profit was 777.2 crore. Promoter holding is 20.87%. So net profit attributable to promoters is 162.2 crore.
Motilal oswal financial for FY23 is 935 crore and promoter holding was 69.68%. So share ho net profit attributable to promoter is 651.5 crore.
According to google, Nithin an Nikhil Kamath together hold close to 60% share of Zerodha. Zerodha has been profitable from year 1 of operations. FY23 Net profit is 2907 crore. Share of net profit attributable to promoters is 1744 crore.
So, the number of active users is not as important a metric as high value customers. Many brokers have been giving cash incentives to customers to open accounts because they use the number of customers metric to go and raise funds from their investors.
The cost of acquisition of many customers is not being adequately recovered by brokers because accounts are opened in many cases just to get the cash incentive by customer and to show the high number of account openings to the investors/VC.
So, think to yourself, if you own and operate a mall, do your want foot traffic where 95% of them are simply doing window-shopping or do you want high spenders who actually buy stuff from the shops so that the mall can continue to run profitably. Hopefully this will clear some misconceptions.
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In the stock broking industry, acquiring a large customer base, even with a dip in revenue, can be a strategic move for a company with a long-term vision for several reasons:
1. Customer Acquisition Cost (CAC) vs. Lifetime Value (LTV):
- Stockbrokers typically earn revenue through commissions or fees on trades. Initially, attracting new customers with lower fees or no fees, lead to lower immediate revenue per customer. However, the goal is to convert these customers into long-term investors who trade consistently, generating a higher Lifetime Value (LTV) over time. A larger customer base provides a bigger pool to cultivate loyal, high-value clients.
2. Network Effects and Brand Recognition:
- In the stockbroking industry, a larger customer base can create a network effect. As more people use the platform, it becomes more attractive to others seeking a vibrant and active trading community. This can snowball into increased brand recognition and attract even more users organically.
3. Economies of Scale and Diversification:
- A larger customer base allows a broker to leverage economies of scale. They can negotiate better deals with exchanges and data providers, reducing operational costs and potentially leading to lower fees for all customers in the long run. Additionally, a large client base allows the broker to diversify its revenue streams. They can explore offering educational resources, premium investment tools, or wealth management services, generating additional income beyond basic trading commissions.
4. Data Advantage and Personalized Offerings:
- A vast user base provides valuable data on investor behavior, trading patterns, and financial goals. This data can be used to personalize investment recommendations, develop user centric features, and ultimately improve customer satisfaction and retention.
5. Competitive Advantage in a Crowded Market:
- As the stock broking industry is becoming increasingly competitive, focusing on customer acquisition, the company can establish a strong market position and gain competitive advantage.
Also it is important to consider, simply acquiring new customers isn’t enough. Onboarding them effectively and providing educational resources are crucial to ensure they understand the platform and feel comfortable investing. Similarly focus on Customer Retention by devising strategies to retain acquired customers and maintain their engagement is essential to maximize LTV and achieve long-term success.
Overall, for a stockbroker with a long-term vision, sacrificing some initial revenue to acquire a large customer base can be a strategic investment. By focusing on customer lifetime value, network effects, and data-driven personalization, the company can build a loyal client base and achieve sustainable profitability over time.
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could you please provide latest active client list on april.