Upstox Essentials

ISIN

IN90MQ103018

Face Value

₹10.00

Total Share

23,61,661

Total Income

₹428.94 Cr

Profit After Tax

-₹62.62 Cr

EPS

-₹477.79

P/E

-232.17

P/B

180.88

Market Capitalisation

₹26,197.91 Cr

Enterprise Value

₹26,193.12 Cr

Book Value

₹613.29

Intrinsic Value

₹1,10,904.00

Earnings Yield

-0.43 %

Sector

Financials

Sub-sector

Stock Broking

Category

Unicorn

Cashflow - Operations

₹15.36 Cr

Cashflow - Financing

-₹36.07 Cr

Upstox Growth

Compounded Sales Growth

  • 189.93%

    1 Year

  • 136.85%

    4 Year

  • 73.65%

    7 Year

Pro Only

Compounded Profit Growth

  • -75.69%

    1 Year

  • -59.83%

    4 Year

  • -90.17%

    7 Year

Pro Only

Return On Equity

  • -43.23%

    2021

  • 12.45%

    2018

  • -1.77%

    2015

Pro Only

About Upstox

  • RKSV Securities (Upstox) is a retail brokerage firm for the trading of securities. They help retail traders shave off their brokerage costs by providing online trading software (mobile and web) for free, and a low-cost brokerage plan. They aim to leverage the power of online trading to help traders all over India lower their brokerage costs.
  • Upstox was incorporated on 6th, April 2009  (then known as RKSV) in a small apartment in Delhi, serving a small cohort of customers, and helping them grow their investments in the public markets. Company then moved to Mumbai, and now is headquartered in Mumbai. Today Upstox has more than one crore (Cr) investors.

  • Upstox IPO Details

  • The company does not plan to bring its IPO as of now

  • Upstox Funding

Funded By Funding Amount Date of Investment Funding Round
Xceed Investments LLC ₹ 15.80 Cr 20 Sep 2022 C4
Blacksoil Capital Private Limited & Blacksoil Realty Investment Advisors LLP ₹ 20 Cr Sep 2022 A3 Debt
Stride Ventures Debt Fund II ₹ 30 Cr 10 Jul 2022 A2 Debt
Inno Ven Capital India Fund ₹ 25 Cr 30 Jun 2022 A1 Debt
EpowerX Pte. Ltd. ₹ 794.70 Cr 31 Mar 2022 C1
EPX Uptech Private Limited ₹ 958.30 Cr 26 Feb 2022 C2
EPX Uptech Private Limited ₹ 413.10 Cr 30 Sep 2021 C
Internet Fund V Pte. Ltd ₹ 178.50 Cr 16 Sep 2019 B
Ratan Naval Tata ₹ 1.30 Cr 08 Mar 2016 A2
GVK DAVIX TECHNOLOGIES PRIVATE LIMITED ₹ 25.10 Cr 21 Jan 2016 A
  • Upstox Merger & Acquisition

Acquisition

Until today company has not done a merger or acquisition
  • Upstox Subsidiaries

RKSV Commodities India Private Limited

Upstox Business Model

Through RKSV Commodities India Private Limited, the company provides its services in the trading of commodities (Gold, Oil, etc.)
  • Upstox Revenue Segmentation

  • Brokerage Income
  • Interest Income
  • Other
  • Upstox Product & Services

  • Pro Web: A powerful and easy-to-use HTML-based trading platform that inter alia provides market analyses through charts and indicators.
  • Pro Mobile: An app-based trading platform that allows traders to trade on the go even with slow internet connections. The application is available on Android and iOS operating systems.
  • Gold, Mutual Funds, IPOs: Upstox also provides investors with a platform to invest in digital gold, mutual funds, and IPOs.
  • Upstox API: An application programming interface to help developers build their own app on the Upstox platform.
  • AmiBroker API: AmiBroker is a third-party charting platform in which one can build strategies through AFL. It also allows a backtesting strategy with the help of historical data.
  • Upstox Assets

Assets (FY21)Value (In Rs Cr)
Loans & Advances157.3
Financial Assets1148.5
Intangible assets under Development42.1
Non-Current Investments12.4
  • Upstox Industry Overview

Industry Statistics

Overview:-

  • Discount Broker:- A discount broker is a stockbroker who carries out buy and sell orders at reduced commission rates compared to a full-service broker. A discount broker or a full-service broker provides services to trade securities online. 

  • When it comes to performing seamless stock trading without encountering the barriers of time and distance, the use of online trading platforms for trading in stocks is quite evident. One can do online trading through 3 basic interfaces i.e., mobile-based, browser-based, and desktop-based.
  • The top trading platforms in India (other than Upstox Pro) include Zerodha Kite, FYERS ONE, Sharekhan Trade Tiger, Angel Broking’s Speed Pro, TradeStation, Trade Eye with Upstox Pro, and Zerodha Kite are highly rated by rating agencies and websites, consistently.


Trading Platform:-

  • A trading platform is a software system used to trade securities. It allows investors to open, close, and manage market positions online through a financial intermediary like an online broker.
  • Online trading platforms are frequently offered by brokers either for free or at a discount in exchange for maintaining a funded account and/or making a specified number of trades per month.
  • The best trading platforms offer a mix of robust features and low fees.


Features of the Trading Platform:- 

  • Trading platforms are software systems used to execute and manage market positions.
  • Trading platforms can offer an easy-to-use interface with basic order entry screens for beginning investors.
  • They can also offer more sophisticated tools such as real-time streaming quotes, advanced charting tools, live news feeds, educational resources, and access to proprietary research.


Market Size:-

  • The industry is likely to clock a total revenue of ~Rs. 27,000-28,000 Cr in FY22, registering a year-on-year (y-o-y) growth of 28.0% to 33.0%.
  • The domestic broking industry’s revenue registered ~10.5% CAGR over fiscals 2015-2020, to reach an estimated Rs 225 billion (bn)


Key Drivers:-

  • Mobile and internet penetration: - Higher mobile penetration, improved connectivity, and faster and cheaper data speed, supported by Aadhaar and bank account penetration has led India to shift from being a cash-dominated economy to a digital one.
  • Expect growth to continue due to systemic under-penetration: - Falling interest rate cycle, coupled with low returns from traditional investment instruments such as gold and real estate, has led to a shift in retail investor interest in the capital markets.

Rise in the number of first-time investors. Month on Month (M-o-M) data of new Demat accounts in 2022 shows the interest of first-time investors towards investing. 

Month (2022)New Account Addition (In Lakhs)
January34.0
February28.3
March28.5
April24.3
May25.0
June23.0
July18.0
August21.0
September21.0
October

18.0


Industry Evolution

  • The Indian brokerage industry has been undergoing a structural shift from a Percentage-led business model to a flat brokerage & subscription-based model.
  • The market share of the top two discount brokers in terms of the number of clients, namely Zerodha and Upstox, has increased from 17.0% to 30.0% in the past year, which reflects clients’ attraction toward flat brokerage plans.
  • Discount brokers like Zerodha, Upstox, 5Paisa, and newly joined: Angel broking and Groww have been major beneficiaries, especially over the past year in terms of incremental client acquisition.
  • Early mover advantage in this segment has benefitted discount brokers. Also, digitalization, user-friendly apps, and interface, service-oriented nature of business have attracted more clients especially New to Market customers. This has led many traditional brokerages like Sharekhan, Kotak Sec, etc. to come up with their own discount plans.
  • Indian broking industry though has a transaction fee model but it’s structurally moving for a clear distinction between charges for transactions and a fee-based model for services like wealth management and investment advisory. While a shift toward a fee-based model was already in the works with brokers focusing on building an advisory model (wealth AUM), the pandemic has added a boost to the pace of change. Apart from advisory services, focus on fund-based activities, including margin funding and loan against shares, is on the rise, enabling brokers to build sustainable earnings.

Impact of Covid-19

  • The covid-19 outbreak was declared a global pandemic by World Health Organization (WHO) on 11th March 2020. Indian authorities had followed an approach of complete lockdown since 24 March 2020 starting with a three-week complete lockdown, during which only defined essential services were operating with limited capacity.
  • Stockbroking service was declared as an essential service.
  • Considering that Industry’s operations are primarily technology based / Online, the Industry has been in operation consistently with minimal staff in the office and others working remotely. 
  • As of 31st March 2021, based on the financials available, the COVID-19 outbreak has not adversely affected the business operations and rather accelerated the growth by onboarding first-time investors.

Key Trends:-

  • Historically, Indians have invested their surplus in physical assets, real estate, and FDs, refraining from investing in capital markets, reflected in Demat accounts as a percentage of PAN card holders at just 13.0%.
  • Another key factor driving the growth of the discount brokerage industry is India’s demographic profile; India has the largest working-age population with millennials (those born between 1980 and 1996) accounting for 36.0% of the population and projected to be 50.0% of its workforce by 2025. 
  • Rising financial savings and digitalization remain long-term growth levers: - The gradual pickup in economic growth, benign inflation, and low-interest rates are expected to increase household financial savings in India. India’s young population is typically more technology-savvy and, with increasing use of wireless broadband internet, internet and mobile trading should get a boost. 


Competitive Landscape:-

Market Share Players in terms of active client base

BrokerActive Clients (Lakh)Market Share (%)
Zerodha66.318.1
Groww49.713.6
Upstox44.212.1
Angel One42.111.5
ICICI Sec29.07.9
5Paisa Capital13.43.7
HDFC Sec11.63.2
Kotak Sec11.23.1
IIFL Sec9.12.5
Others89.624.5
Total366.7100.0

Future Prospects

  • Retail Discount Brokers revenues have grown 3.4 x from Rs 10.0 Billion (bn) in FY19 to 31.0 bn in FY21. It is expected to grow 2.8 x further from 31.0 bn in FY21 to 85.0 bn in FY25 growing at a Compound Annual Growth Rate (CAGR) of 28.6%.
  • Revenue Market Share (RMS) of discount brokers to remain the fastest growing among all the brokers.

Government Initiatives

  • SEBI, in 2021, introduced a blocking mechanism in the Demat account of clients undertaking sale transactions, for ease of operations in the Early Pay-in mechanism.
  • In August 2021, SEBI prescribed provisions pertaining to the Electronic Book Provider (EBP) Platform for the issuance and listing of Non-Convertible Securities, Securitized Debt Instrument, Security Receipts, Municipal Debt Securities, and Commercial Paper, stipulating the issuances which necessarily be made through EBP, the eligible participants, obligations/ responsibilities of various entities, provision to an issuer to withdraw offers, the process of bidding and allotment, etc.
  • SEBI had issued guidelines regarding the execution of ‘Demat Debit and Pledge Instruction” (DDPI) for the transfer of securities towards deliveries/ settlement obligations and pledging/ re-pledging of securities. DDPI shall serve the same purpose as Power of Attorney (PoA) but will significantly mitigate the misuse of PoA.
  • Considering the emergence of passive funds, i.e., Exchange Traded Funds (ETFs) and Index Funds as investment avenues for retail investors due to their inherent advantages, a need was felt to review the regulatory framework for passive funds in India. In this regard, a Working Group(WG) was constituted with representation from various stakeholders. The recommendations of the WG and stakeholder feedback were deliberated by the Mutual Funds Advisory Committee (MFAC) and upon the recommendation of MFAC, SEBI came up with necessary circulars in 2022. Upon requests received by stakeholders, the clause of the circular dealing with ‘direct transaction in ETFs through AMCs’ shall be applicable from May 01, 2023.
  • Govt says exceeded FY22 asset monetization target; Rs 96,000 Cr realized: The Centre has completed asset monetization worth Rs 96,000 Cr during FY22, surpassing the target of Rs 88,000 Cr.
  • For FY23, it has set itself a goal of Rs 1.62 trillion and already has a pipeline of assets worth Rs 1.6 trillion under advanced stages of implementation.

Upstox Awards & Achievements

  • Highest number of Demat Accounts in a single month by CDSL in October 2021
  • Best innovation in wealth management in 2020 by India FinTech Forum
  • Highest number of accounts in a single month by a broker in (2019, 2020) by CDSL
  • Most promising broking house of the year by MCX in 2019


Upstox Strengths

  • Company is backed by the marquee investors like Mr. Ratan Tata and Tiger Global
  • Company has a good brand recall value and has been investing in marketing it. The company was the official sponsor of the Indian Premier League (IPL) in 2021 
  • The in-house technology team make the operations smooth and created a user friendly interface for the mobile application.
  • Promoters of the company have relevant prior experience in dealing with and developing tech-enabled trading systems

Upstox Shortcomings

  • Company is making losses for the past two years, despite of conducive environment for the stock market and brokers
  • First-time investors get on board with the company generating very low trading volumes and hence less brokerage income
  • Customer acquisition cost stands at Rs 830.5 which is high as compared to its competitor at Rs 336.7

Upstox Opportunities

  • While investing in stock markets has become more popular in India in recent times, overall penetration remains low – only 55.0 mn Indians invest in the stock markets, which is around 4.0% of the country’s population. In comparison, over 50.0% of Americans own stocks. Even in neighboring China, the percentage of the population that invests in the stock markets is 7.0%. India’s figure of 4.0% indicates plenty of headroom for India’s stock market penetration to grow
  • Opportunity to sell cross-products like Financial Educational Courses, Mutual Funds etc. 

Upstox Threats

  • Company's business is concentrated on brokerage income from trading only. Any downturn in the stock market will lead to unfavorable conditions for the investors to put fresh money
  • Entrants of new players in discount broking industry
Upstox Rating

  • RECOMMENDATION

    Sell

  • Upstox Detail Info

Industry Statistics

PRIVATE LIMITED

Registered In

India

Planify Ticker

Upstox

Reg Office: Mumbai India

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