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How do discount brokers earn?



Who are discount brokers?

Discount brokers are brokerage firms that offer a platform to execute trading in the stock market. They charge an account opening fee and commission charges for each trade that a trader performs. Discount brokers do not provide any advisory services to their clients. We covered an article on discount brokers in detail. The discount brokerage firms have been performing exceptionally well and their share of clients in NSE covers 60% of total traders. Now let us see who are the major discount brokers in India.

We will look into the major revenue drivers of these companies.

How do discount brokers generate revenue?

Revenue from brokerage and commission charges

  • Most discount brokers provide zero charges for equity trading for a lifetime, Rs.20 per trade for intraday, F&O, currency, and commodity trading. Mutual funds can also be bought directly with zero charges.
  • Few other brokerage firms like Upstox charge zero charges for mutual funds, Rs.20 per trade for equity intraday, F&O, currency, and commodity trading, or 0.05% per trade. Also, Rs.20 per equity delivery or 2.5% of the trade, whichever is lower.
  • Zerodha and other brokerage firms’ revenue is contributed by 70% of brokerage fees and trading fees.

Let us see the break-up of Angel One in Q423.

Interest income

How do brokerage firms generate interest income?

Interest income includes interest on

  • MArgin fund trading
  • Lending activities
  • on FD under line with stock exchanges
  • Delayed payment by customers
  • Deposits with banks

The above graph shows the interest income increase in each quarter for Angelone brokerage services.

Algo trading

What is Algo trading?

Algorithmic trading involves the usage of computer codes to enter or exit the trade once certain criteria in the stock market are met. This trading is also known are algo trading, further, it is also known as automated trading.

Most of the trading platforms provide algo trading APIs. We need to sign up and can choose from trader APIs, Publisher APIs, or market feed APIs. From there we can link the API with the trading Application. Also, it is possible to customize the APIs based on personal preferences. When a trading platform such as Zerodha or Angelone provides an API, it can create its own API or purchase it from vendors who can program it using the coding languages. Various Algo trading platforms that are available in India are

  • Zerodha Streak
  • Zerodha Algoz
  • Tradetron Tech
  • Algo Test
  • Quantiply
  • Algobulls

So a discount broker can generate revenues by providing the traders with algo trading strategies and APIs.

Start-up Fintechs

Rainmatter is Zerdha’s incubator that has been launching various server startups in the fintech industry. Few successful startups incubated by Zerodha are

  • Small case- A basket of stocks that reflects an idea. And is India’s 1st thematic investment platform.
  • Streak- Streak lets the trader plan and manage trades without coding by allowing backtesting and deploying trading.
  • Tradelab- A cutting-edge technology to drive capital market businesses.
  • CRED- A members-only app that offers rewards for making payments on credit card bills
  • LearnApp- It is a learning platform like Udemy, or Coursera to learn trading, investing, technology, and management which is taught by industry experts.
  • Upstox also provides a learning platform known as UPLearn. Also, it delivers Upstox for investors, and Upstox Pro for investors with powerful trading tools in equity, F&O, commodities, and currencies.

Advisory services

We know discount brokers provide only trading platforms to trade with minimum fees for each transaction. But there are a few trading platforms like AngelOne, Zerodha. Angel One gives curated portfolio advisory. The advisory recommends buying a basket of stocks with different risk appetites.

Some of the small cases ( basket of stocks) provided by Angel One are

Rising IndiaMin amount- Rs.871-year CAGR- 18.38%Medium volatility
Dividend kingsRs.17523.74%Medium volatility
ARQ Prime by Angel OneRs.39, 17729.41%Medium volatility
India top 100-miniRs.11424.50%Medium volatility
India top 250 -miniRs.14224.50%Medium volatility

Rather than investing in only equity or gold Angel One also provides a portfolio that invests 65% in equity and 35% in gold. The volatility of this small case is low, as gold is immune to inflation and economic shocks.

Revenue of various discount brokers

Having discussed the ways discount brokers generate revenue, we will see how much each company is generating revenue.

In this article, we discussed discount brokers and how these brokerage firms make money. The revenue sources of discount brokers were discussed. The services and products they offer will vary from broker to broker. The competition is high among them because of this they give free offers for certain trades. Among these brokerage firms, Angel One is the only company listed on stock exchanges. The revenue keeps increasing as long as traders carry out intraday trading and through other sources. This crowd performing trading every day compensates for the crowd which doesn’t trade every day contributing to an increase in sales volume. The investing population will prefer discount brokers over full-time service brokers owing to the least charges for trading, ease to start an account and trading, and self-learning of the market which will fuel future confidence in trading.

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Finance World

Why Muthoot Finance is not affected by the small cap and mid cap fall?



This week, if you’ve been keeping an eye on the stock market, you might’ve noticed something unusual. While the small cap and mid cap markets took a serious dive, Muthoot Finance seemed to just avoid it, falling by a mere 2%. So, what’s their secret?

What is the business of Muthoot Finance?

First up, Muthoot Finance has a strong foothold in gold loans. Now, why does this matter? Well, when other investments seem risky, people tend to fall back on gold because it’s considered a safer bet. With gold prices staying high, Muthoot’s gold loan business is like a stable ship in a stormy sea.

Muthoot Finance target price by Kotak

Kotak Institutional Equities is pretty optimistic about Muthoot, recommending a “buy” with a target of Rs 1,500. They think Muthoot is in a prime spot to grab a bigger slice of the gold loan market. Plus, with some Non-Banking Financial Companies (NBFCs) hitting a rough patch, Muthoot has a clear ground to expand and grow further. Unlike NBFC, Muthoot has a strong ground presence with offices and branches, they have physical repo with their customers, unlike NBFC who operate from AC offices.

New Friends and New Frontiers

Muthoot isn’t just sitting pretty with its gold loans; it’s also making moves. It teamed up with Evfin to finance electric two-wheelers across India. And there’s more – Muthoot FinCorp has brought Veefin Solutions on board to kick off supply chain finance operations. This means they’re planning to lend a hand to small and medium businesses, helping them keep the wheels turning. So, its a great news that Muthoot is expanding into fields that are not dependent on gold loans alone.

Spreading Their Wings

Muthoot Microfin, a part of the Muthoot Group, is pushing into new territories too. They’ve just set foot in Telangana and have their sights set on Andhra Pradesh next. This move is about bringing more people into the financial fold, especially in places where banking services might be hard to come by. This gives an edge to Muthoot over banks and NBFC.

Are you wondering whether to invest in Muthoot Finance or Manappuram Gold? Take a look at this:

So, What’s the Deal?

While the market’s mood swings have sent some companies into a pit, Muthoot Finance has managed to stay stable. Thanks to its focus on gold loans, strategic partnerships, and expansion plans, it’s not just surviving; it’s set to thrive. So, while the rest of the market might be catching its breath, Muthoot is marching on, steady as ever.

Keep following us for more such latest news on TradeAlone.

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Finance World

Infibeam Avenues Ltd expands into the US Market with an Acquisition



Hello, digital pioneers and fintech enthusiasts! Let’s dive into a groundbreaking announcement for Infibeam. Infibeam Avenues Ltd, an AI-powered financial technology, is embarking on an exciting journey by acquiring a 20% stake in XDuce. XDuce is a mastermind in enterprise Application and AI development based in the United States. This bold move involves an investment of USD 10 million. This also marks a significant milestone in Infibeam Avenues Ltd’s global expansion narrative.

XDuce: A Hub of Innovation

Nestled in the heart of New Jersey, XDuce boasts a team of over 150 software developers. They’re a team behind the curtain for marquee clients like Bank of America and Morgan Stanley, to name a few. XDuce’s expertise in business application implementations and transformation is nothing short of legendary in the financial and insurance sectors of North America.

A Fusion of Giants

So, what happens when Infibeam Avenues Ltd and XDuce comes together? Infibeam Avenues Ltd wants to merge it’s AI Solutions and CCAvenue Payments business into the network that XDuce has built. This collaboration is about expanding business footprints, revolutionizing how AI-driven technologies are employed in fraud detection, authentication, and risk identification in the financial sector of the US.

Redefining Financial Technology

Imagine a world where transaction fraud is no longer a looming threat, thanks to state-of-the-art AI technologies. That’s the vision Mr. Jay Dave, CEO of XDuce, and Mr. Rajesh Kumar SA, CEO of Phronetic.AI, share. By integrating PhroneticAI abilities with XDuce’s solutions, they will offer businesses and consumers in the US with security and efficiency.

The Road Ahead

According to Mr. Vishwas Patel, Joint Managing Director of Infibeam Avenues Ltd, international business currently contributes less than 10% to the company’s total revenue. But with strategic moves like this, they’re aiming for international business to soar to 30% of total revenue in the coming years.

Infibeam Avenues Ltd at a Glance

Infibeam Avenues Ltd is at the forefront of offering digital payment solutions and enterprise software platforms across the globe. With a transaction worth INR 4.5 trillion (US$ 54 billion) processed in FY23, and a client base of over 10 million. Spread across digital payments and enterprise software platforms, they’re leading digital revolution.

Wrapping Up

The strategic investment in XDuce is a bold step towards Infibeam Avenues Ltd’s vision of global expansion and innovation.

Stay tuned with Tradealone, as we continue to follow this exciting journey of Infibeam Avenues Ltd. Stock price for Infibeam closed 7% up today. We also see a continues profit growth for Infibeam Avenues over the past 4 years. Although, we cant recommend a buy or sell call for the stock, however we feel this stock deserves your attention.

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Finance World

Satin Creditcare Expands its Reach by entering Telangana and Andhra Pradesh, stock has doubled so far this year



In a country where financial inclusion remains a major yet challenging goal, the expansion of services to underbanked regions marks a significant step forward. Satin Creditcare Network Limited (SCNL), a leading name in microfinance, announces its strategic entry into Telangana and Andhra Pradesh. This move not only amplifies SCNL’s presence to 26 states and union territories across India but also underlines its commitment to empowering the economically marginalized communities with vital financial services.

A Leap Towards Nationwide Financial Inclusion: SCNL’s mission to drive financial inclusion is more than just a business expansion; it’s a pledge to reach the unreached. The opening of two new branches in Telangana (Warangal and Huzurabad) and one in Kadiri, Andhra Pradesh, is a testament to SCNL’s dedication to making financial services accessible to all, especially in rural and semi-urban areas where banking facilities are scarce.

Why Telangana and Andhra Pradesh?

The choice of Telangana and Andhra Pradesh for SCNL’s latest expansion is strategic. Both states have shown promising economic growth yet house significant populations that lack access to basic financial services. By stepping into these states, SCNL aims to fill this gap, offering microfinance solutions that can serve as a catalyst for economic empowerment and sustainable development. Moreover, Telangana is a fast growing hub for Pharma industry as the state capital Hyderabad leads the way.

SCNL’s Blueprint for Empowerment

SCNL’s approach to empowerment through financial inclusion is holistic. Focused on rural India, with 76% of its operations dedicated to rural communities across 97,000 villages, SCNL is not just providing financial services but is also contributing to the rural economy’s growth. This expansion is a stride towards enabling access to credit for the underserved, thereby fostering an environment of economic resilience and growth.

A Message from the Leadership

Mr. HP Singh, Chairman cum Managing Director of SCNL, remarks, “Our expansion into Telangana and Andhra Pradesh is a significant milestone in our journey towards a financially inclusive India. It’s not merely about increasing our geographical footprint; it’s about touching lives, empowering the marginalized, and contributing to the nation’s economic fabric. We’re here to make a difference, one individual, one community at a time.”

Ashirvad Microfinance is a fast growing company as well. Check it out if you are interested.

Beyond Expansion – A Look at SCNL’s Innovations

SCNL’s innovations extend beyond traditional microfinance. The institution’s portfolio includes loans to MSMEs, affordable housing loans through its subsidiary Satin Housing Finance Limited (SHFL), and the commencement of MSME business through Satin Finserv Limited (SFL). These initiatives demonstrate SCNL’s commitment to diversifying financial solutions that cater to various needs of the underserved.

The Road Ahead for SCNL

As SCNL carves new paths in Telangana and Andhra Pradesh, the future looks promising. This expansion is not just about growth but about deepening the impact of financial inclusion across India. With continued innovation and a steadfast commitment to its mission, SCNL is poised to create significant strides in empowering communities and fostering economic development across the country. Moreover, the stock price for Satin Creditcare has almost doubled in the last one year.

Conclusion: SCNL’s expansion into Telangana and Andhra Pradesh marks a new chapter in its mission to facilitate financial inclusion across India. By reaching out to the economically marginalized sections of society, SCNL strengthens its role as a catalyst for economic empowerment and sustainable development. As we watch this journey unfold, the prospects for a financially inclusive India appear brighter than ever. Despite that we do not see any positive signs from the revenue and profit growth of the company over the last 5 years. Thus, we feel that investors must be cautious while investing here.

Remember that microfinance companies also face competitions from the major banks. However, as this move is towards uncharted regions of Telangana and Andhra, we do not think that the banks would pose any risk to Satin Creditcare.

Call-to-Action: We invite you to join the conversation: How do you think SCNL’s expansion will impact financial inclusion in Telangana and Andhra Pradesh? Share your thoughts and insights in the comments below. Let’s discuss how financial empowerment can transform lives and communities. Also, please follow Tradealone for more such latest updates.

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