5PAISA - 5paisa Capital Limited Share Price

Management highlighted a challenging Q3 FY25 due to regulatory changes (SEBI's "true to label" norms and F&O reforms) impacting client activity, broking revenue (-8% QoQ), and allied income (-39% QoQ). Despite industry headwinds (24% drop in new customer acquisitions), they emphasized long-term optimism, believing regulations enhance transparency and sustainable growth. Key points include:

• Customer Metrics: Acquired 1.11 lakh new clients (total base: 47.4 lakh), 8% QoQ growth in client funding book (Rs.265 crore), and 73% YoY mutual fund AUM growth (Rs.1,386 crore).
• Financials: PAT grew 8% YoY to Rs.16.2 crore (19% margin) with cost optimization reducing expenses (-14% QoQ).
• Product Enhancements: Launched revamped web/mobile platforms (Flutter-based app, F&O 360 tools) to improve user experience and scalability.
• Strategy: Focus on cross-selling (broking/MF products), maintaining MTF pricing discipline (16.42% rate), and balancing growth/profitability. Payback periods for client acquisition may extend to 8 months, but no immediate pricing changes planned.
  Management remains confident in leveraging tech-driven solutions and regulatory alignment to drive future growth, though near-term volatility is expected.

Question 1:
Sir I have two questions from my side. Firstly, with respect to the payback period of our CAC how do we see this being affected in light of these regulatory changes and secondly is there any change in strategy from a customer acquisition perspective given we see a sharp decline in s and o volumes industry wide.

Answer Summary:
The payback period for customer acquisition cost (CAC) is estimated to extend from six to eight months due to regulatory impacts. While the core strategy remains unchanged (targeting customers with long-term value), the company may fine-tune cohorts based on evolving norms. The decline in F&O volumes reflects industry-wide trends, but 5paisa remains focused on acquiring users aligned with its product offerings (495 characters).

Question 2:
Got it and lastly if you can just throw some light on the cross sell that we from a customer acquisition perspective is there a cross-sell opportunity and how are we able to cross sell the mutual fund products or different products across our value chain of the customers so any sort of color on that would be helpful.

Answer Summary:
Cross-selling opportunities exist between trading (e.g., broking) and investing products (e.g., mutual funds). The company prioritizes cross-selling within its existing product suite (investing and trading) to enhance customer engagement. The focus remains on leveraging India's underpenetrated market rather than diversifying into unrelated offerings (479 characters).

Question 3:
Hi my name is Uday, I am working with Investor Capital. I had one question on the pricing, are you envisaging any change in your pricing policy due to these regulations or to mitigate the impact of this regulation?

Answer Summary:
No immediate pricing changes are planned. The company will monitor market dynamics, competitor actions, and volume trends before adjusting pricing. Current pricing aligns with industry standards, balancing profitability and competitiveness (434 characters).

Question 4:
Sir, firstly from an MTF perspective we have seen our book growing fast over last few quarters so how should we think about this book in near future especially in light of the changes that there could be a rate fall or rate fall in coming quarters.

Answer Summary:
The MTF (Margin Trading Funding) book's growth is tied to market conditions, not speculative rate changes. 5paisa maintains its MTF rate at ~16.42% (after a recent reduction) and avoids aggressive pricing. Rate fluctuations may impact spreads, but the focus remains on sustaining a 4-5% spread while staying competitive (476 characters).

Question 5:
Okay got it and lastly sir how do we see this broking environment especially for 5paisa panning out over the near term, especially in light of this regulatory changes do we see any further changes in cost structures or do we just have to wait and watch until the situation settles around?

Answer Summary:
Regulatory changes are viewed as long-term positives for market transparency. Short-term impacts on volumes and costs are expected, but 5paisa will balance growth and profitability through levers like cost optimization, pricing adjustments, and product enhancements. The strategy prioritizes adaptability without compromising core objectives (499 characters).