Highlights:

The markets directly impact the company to a very large extent. The market rebounded from March lows, but clearly is still below the pre-COVID level.

All global central banks, has been swift in terms of rate cuts and providing liquidity and this has probably helped partially at least, fueling the global rally in the equity market.

The quarter witnessed a gradual reopening of the nationwide lockdown. Despite weaknesses on macroeconomic front, the Indian headline indices posted their best-ever quarterly returns since 2009 gaining almost 20% in the quarter and recouping 35% of the March 2020 lows.

Globally, retail participation in equity markets increased dramatically during this quarter. India also saw the level of retail participation hitting some record high.

The company has witnessed a strong growth in active clients. And this happens with many inactive customers entering the market as well as a sharp rise in number of newcomers into the market.

This trend is fueled by availability of a completely digital no-touch format of engagement, which is offered by large technology-based players. Work-from-home environment is providing additional time to investors as well as the increase in disposable income, which is caused by the reduction in discretionary spending.

The company believes that although some part of this retail participation seen in the current quarter may moderate in the coming quarters, there is clearly a structural shift by customers preferring to deal in an online and a remote format offered by digitally led intermediary rather than a physical format.

This quarter also witnessed certain regulatory changes aimed at providing operational convenience to retail investors as well as to protect the long-term interest of these retail investors. The regulatory changes auger well for the orderly growth of the industry in the longer term.

So being classified as an essential services company, the company ensured that it remained accessible to customers and open for business at all times during the lockdown phase.

The company has been focusing on identifying avenues to digitize all the non-digital parts of business.

The intent is to diversify and granularize business model and the company is making good progress on all fronts.

The completely digitizing account opening process has helped the company to surpass last year's monthly average run rate of account opening in the month of June.

The company is being able to diversify client-sourcing channel mix with the largest sourcing channel partner, which is ICICI Bank now contributing approximately about 65% of the total customers as compared to 80% in the last fiscal.

In the equities business, the company witnessed an increase of about 90% year-on-year in terms of the average number of customers trading with it on a daily basis.

ADTOs or the average daily turnovers across equity and derivatives grew faster than the market, aided by propositions like Prime, prepaid and the Option 20 pricing plan, all of which are gaining traction.

The market share increased by about 260 bps in equities and 150 bps in derivative markets.

The company has also been able to scale back ESOP and NPS book to approximately Rs 1500 crore as at June 2020, up from about Rs 580 crore as at March 31 2020.

NSE active customer base grew by 27% yoy and stood at approximately at 1.1 million as at June and total active client base stood at about 1.5 million, which is a growth of about 15%.

The company faced some headwinds in distribution business, as contact-based products were clearly impacted as a consequence of the lockdown.

The wealth management business also got impacted by constraints arising from COVID. However, despite this, it registered a 36% growth on back of the equity franchise and digitally available products, primarily fixed income products. Also during this quarter, the company added about 1600 new customers to this segment. The assets of clients in the wealth management business increased by about 1% on sequential quarters to about Rs 1 trillion. The company also saw improvement in yield.

Being an asset-light company that generates high operating cash flows, the Board has revised dividend distribution policy, with an endeavor to have a dividend payout of at least 50% of profits after tax every financial year.

The company would focus on a rapid increase in digitization at all levels within the organization, increasing cost efficiencies in times of uncertainty, invest in technology for upgrading infrastructure and capacity and lastly fortify talent pool to position well for the future.

There is a front-loading of some costs such as CSR spend, so there would lower pressure for rest of quarter of FY2021.

The variable cost would be moving with the business.

Overall, fixed-to-variable ratio ranges from about 70-30.

About 97% of the overall ADTO comprises F&O.

With the completely digitized process, it takes about 4 to 5 hours time before customer can place his first order.

The company will be soon adding the option of investing in US security on the ICICIdirect platform. The company hopes that in the more medium term, this will become an interesting story for the company.

The company has not utilized COVID provision, it continues to remain in balance sheet.