5Paisa Capital Limited — Q1 FY26 earnings call

Again, all of this really started where SEBI took, and I think the regulator knows best, and they do the right things. This all started last year with the publishing of the report as well as some of the measures that were taken, and they did have a material impact across the industry. So the volumes fell earlier this year for not just us but for all of our peers and broking industry in general, but you also see the volumes are coming back again. Now, what the regulator will do in the next couple of weeks or months or whenever they come up with, maybe, some additional measures, I don't know, I can't comment on it. What we've seen typically is that retail investors provide not just the big ones of the retail investors of today. There is a different breed. They want to build wealth, they want to learn, and they are a critical part of capital markets and broadening and deepening of our capital markets in terms of providing liquidity. Yes, there could be a short term impact, which I can't speculate on but, usually, if history is any guide, I think these things come back to normal over a period of time with adjustments.

Analyst questioned the potential impact of SEBI regulations on F&O turnover, a key revenue driver, and management acknowledged potential short-term impact but expects normalization.

Asked by Meet Mehta

5paisa MCP is specifically an Al assistant. It is not an algo trading platform. What it does is that there is a setup that you can do. Once you have done, there are a few steps you have to do. Once you have done that setup, it uses the MCP protocol which is model context portfolio, connects to cloud Al. Cloud is one of the Al providers or Al assistant providers, and I think everybody knows it, like a ChatGPT. Let's say you have a broking account with 5paisa and you do the initial setup where you connect to your broking account and whatever you can do in your broking account, today you can do via chat, via the Al chat. You could buy two shares of 5paisa, and it will go and execute that, analyse my portfolio. It'll give you analysis of your existing positions. It would also suggest you strategies. It really depends on the prompts that they give you. It's an Al assistant as well as has the capability to integrate with your trading account and you can basically use that to do whatever you want to do with your trading app. It is not an algo trading platform.

Clarification on the functionality of the newly launched AI assistant, distinguishing it from an algorithmic trading platform while highlighting its capabilities and future plans for algo-side development.

Asked by Meet Mehta

I think your our overall strategy is to continue to build trust in the market. I think the financial services market, especially if you are being in the business for some time and with the pedigree that we have, we've been one of the earliest discount brokers in the industry before everyone else. So you want to continue to build on that legacy. We want to be tech first, which we are but there's a lot of work and a lot of investment which is needed on an ongoing basis to remain competitive. Our investments will be on products and our investments will be on user experience and our investments will be on continuously upgrading our tech stack, specifically to provide the best experience to F&O traders, investors, and obviously, equity investors both on the mutual fund side as well as people who are buying and selling stocks as well. We believe that there is a lot to do and there is a lot of growth in the market. I think we are in very early stages in our Indian capital market journey. To answer your question, at this point in time, we are not looking to get into wealth or any such related trajectory. We think there's a lot to do in this space as well and being the best top three, top five players in the next few years.

Management clarified its strategic focus on being a tech-first broker providing the best experience for F&O and equity traders, explicitly stating no current plans to enter wealth management or third-party product distribution.

Asked by Jaiprakash Kumhar

That's a great question. I think you have to do both, I think answering related question earlier. As far as focus is concerned, it is clearly on tech for investors and traders or traders and investors. I think from our company perspective, we are in a sort of a massive product plus tech upgrade cycle. We would like that to be concluded, although it is never concluded in this industry because we have to continually invest and then start to go more aggressive on client acquisition. I'm telling you as is. Right now, we are doing more calibrated acquisition. We will be mindful of our costs as well. Obviously, we all realize that we are a publicly listed company. We are mindful of both revenue as well as cost and the profits that we make. I think we get the best ROI when this product and tech upgrade cycle is complete. That's where, depending on macro factors, we'll significantly accelerate acquisition.

Analyst questioned the decline in client acquisition despite market rebound. Management explained its calibrated acquisition approach, prioritizing quality and ROI, and indicated that aggressive acquisition will resume after the current product and tech upgrade cycle is complete.

Asked by Arasan M

It's 80/20. 80% is for derivative and 20% is in the cash segment. It is in line with most of the other discount brokers.

Provided a clear breakdown of revenue sources, indicating a high reliance on derivatives trading, which is typical for discount brokers.

Asked by Mayank Khadiwala

I think the way that I would address your question is that as far as the serious people on any platform are concerned, unless the pricing drastically changes on the upside, it typically does not matter because they value other things like stability, reliability nobody lease for 5 rupees, but there could be a bunch of customers who would believe that there is more value to add, we had in another platform which is lower. Yes, they might they might leave. Finally, we can't estimate whether someone raises the price, it will be good for us or not. Maybe, they even raise the price, people still stick with them. You follow what I'm saying? The same methodology even applies to us, for people who believe that 5paisa is better with adding value. Even if we raise the prices, they will stick with us or newer customers will continue to come.

Management articulated its belief that serious traders prioritize platform stability and reliability over marginal price differences, suggesting that moderate price increases would not significantly impact customer retention or acquisition for value-driven users.

Asked by Mayank Khadiwala