Dear Sheru,

Greetings to you and hope you are having a great week. Last month, the stock market closed with gains again as foreign portfolio investors continued to buy Indian shares. The good news is that all of our core businesses, ie broking, mutual fund (MF) distribution, exchange margin funding (EMF) and Loan Against Securities, grew in May 2023. Let us look at the highlights and performance of May 2023 without any ado.

• Our daily average revenue grew by 9% MoM in May this year.
• Our market share in the F&O segment rose by 3% MoM in May 2023.
• New client additions recovered last month and grew by 2% MoM.
• Daily client activity saw a growth of 14% MoM in May this year.
• In the commodity broking business, the ADTO grew by 6% MoM and revenue grew by 18% MoM in May this year. There was also a noticeable growth of 6% MoM in Business Partner participation in the same month.
• In the currency broking business, the number of traded clients showed a growth of 4% MoM and the revenue also increased by 4% MoM in May 2023. The number of active Business Partners in the segment showed a rise of 17% MoM in the same period.
• The trailing 12-month active client count stood at 665K at the end of May 2023. Though less than our April 2023 number, our performance on this metric (in terms of the percentage of growth/decline) was relatively better than that of the full-service broking category market leader.
• Close to 11.13K branch-mapped broking clients were reactivated as part of the MRP in the last month. This is the highest score in 2023 so far.
• Our MF AUM increased by 3% MoM in May this year.
• We ended May 2023 with EMF AUM of Rs.1,004 crore, up 2% MoM.
• In May this year, our LAS and ESOP disbursements reached a 14-month high of Rs.207.31 crore.
• New disbursements in the LAS and ESOP business surged by nearly 214% MoM and our ESOP book grew by a whopping 81% MoM during the month.
• We introduced IPO online subscription facility for HNIs on our mobile application, Sharekhan, in May this year.
• The APAC Fundraising Campaign 2023 was launched in May this year.
• Sharekhan launched an education campaign to educate its Branch Mangers in the best practices of branch management in May this year.
• Last month, we also reiterated our four core management values including Delegation, Empowerment, Ownership and Accountability for the benefit of Sherus as each one of us must practise these values in the decisions and actions we take at work every day.

The Indian stock market remained bullish in May this year and the benchmark indices, Nifty and Sensex, closed up about 2.5% each month on month (MoM). Reflecting the market sentiment, our equity broking business delivered an improved performance. Even though we lost 1% share in the cash market, our market share in the futures and options market increased by 3% MoM during the month. In the same period, our new client additions recovered and grew by 2% MoM and a 14% rise was noticed in daily client activity. Consequently, our daily average revenue grew by 9% MoM in May this year. Let us continue with the good work and build on the momentum to achieve our annual targets in the remaining six months of 2023.

In the commodity broking business, our monthly report card showed an improvement last month. The average daily turnover (ADTO) increased by nearly 6% MoM, the number of traded clients inched up by 2% MoM, the average daily revenue grew by more than 18% MoM and the number of active Business Partners rose by 6% MoM in May 2023. However, there was a contraction of 9% MoM in our market share in the same period.

In the currency broking business, though the number of traded clients surged by 26% MoM, the ADTO dropped by 10% MoM in May this year. Having said that, we still generated 4% more revenue from the currency broking business in the month compared with April 2023. Another interesting observation: Business Partner participation in the commodity and currency broking business is growing at a faster clip compared with branch participation. There was a growth of 17% MoM in the number of active Business Partners in the currency segment in the last month. I urge our branches to also participate more in the commodity and currency markets so that our clients can enjoy the benefits of trading in these asset classes.

The Mission Reconnect Programme (MRP) delivered a robust performance in May this year. The trailing 12-month (TTM) active client count stood at 665K at the end of the month. Though less than our April 2023 number, our performance on this metric (in terms of the percentage of growth/decline) was relatively better than that of the full-service broking category market leader. The MRP facilitated the reactivation of almost 11.13K branch-mapped clients during the month, the score was the highest in 2023 so far. The efforts of the Business Partners resulted in the reactivation of another 5.4K clients in the same period. The trend remains that reactivations are also good for revenue growth. Close to 4.6% of the clients who got reactivated in May have also traded in futures & options (F&O) already. Also, a large proportion of the reactivations have continued beyond just one or two transactions. Almost 34.6% of the reactivations that took place in May have conducted three or more transactions already. My best wishes to the entire front-line team as well as our Business Partners for the continued success. Let’s work harder to realise our dream of winning back 10 lakh hearts in 2023.

Our mutual fund (MF) assets under management (AUM) remained northward bound in May this year and increased by 3% MoM to Rs.6,793 crore during the month. The increase was in line with the performance of the broader equity market that recorded a growth (the Nifty 50 index increased by over 2% MoM during the month) on a month-on-month basis. The gross inflow for the month stood at Rs.152.38 crore and the net collection witnessed an outflow (of about Rs.63 crore) for the first time since the beginning of the year. The inflows into systematic investment plans (SIPs) regained momentum in the last month, taking the total SIP collection to Rs.53.98 crore (up 3% MoM), thanks to the SIP Rewards Dhamaka contest that ended last month. The MF industry witnessed a growth of nearly 7% MoM in the SIP inflow in the same period. Hence, we expect Sharekhan’s SIP inflows to steadily grow as SIP seems to be the preferred investment option for investors due to the persistent volatility in the stock markets.

Our EMF business grew by about 2% MoM in May 2023. We saw a moderate growth in funding offtake as the stock market recovered from the lower cash market volumes and fewer market opportunities in the previous months. Our Branch Network contributed almost 68% of the total funding with the rest coming from the Business Partners. We have launched a new spot incentive programme for our front-end staff for acquiring new funding and reactivating inactive clients in EMF in June this year. I hope all Relationship Managers will make the most of this opportunity to help clients generate more returns by investing less, build the company’s EMF loan book and boost their own earnings.

We recorded the highest level of disbursements in our LAS and employee stock option plan (ESOP) funding business in May this year as our total LAS and ESOP disbursements touched Rs.207.31 crore during the month. Sheru Dipak Kumar, LAS – Area Sales Manager, from the Delhi team alone contributed disbursements to the tune of Rs.104.49 crore (Rs.99.03 crore for ESOP funding) during the month. Kudos to Dipak and the rest of the team! During the month, new disbursements in the LAS and ESOP business jumped by nearly 214% MoM. The LAS book contracted marginally by nearly 3.55% MoM but our ESOP book expanded by a whopping 80.86% MoM in May 2023. The healthy growth in the disbursements and the ESOP book can be attributed to the good rapport that has developed over time between our LAS Area Sales Managers and the existing HDFC and HDFC Bank ESOP customers, most of whom availed of a new tranche last month and also referred their colleagues to us.

Channel-wise break-up of LAS disbursements in May 2023

The Operations team continued with their efforts to improve customer experience in Sharekhan. Last month, they introduced the IPO online subscription facility on the Sharekhan mobile application (app) for the high net worth individual (HNI) clients. Now, HNI clients can easily apply for IPOs online by placing bids of up to Rs.5 lakh. The feature is already available on our website, www.sharekhan.com. About 70% of our customers conduct their trading and investing transactions through our mobile app and the new feature will enhance their experience. The initiative has also made our IPO offering more visible on a highly preferred digital asset. A similar facility is also offered by our major competitors. I congratulate Pravin Darji and Yatish Sarvankar from the Operations – IPO team, Kruti Hariya and Tejas Khadilkar from the Digital Assets team; and Gaurav Shah and the rest of the Mobile Development team for successfully launching the useful feature.

The annual APAC Fundraising Campaign returned in May this year to #ChangeLives. In India, the fundraiser is mobilising funds for two non-government organisations, Agaram Foundation and the Akansha Foundation, to support their exemplary work in promoting education for children in rural areas and the low-income communities. We urge all Sherus to participate in the fundraiser for a noble cause. Donate whatever you can to help the underprivileged, every rupee counts and will help #ChangeLives. Plus, when you donate, you qualify for tax exemption under Section 80G of the Income Tax Act, 1961. The fundraiser is open till June 30, 2023. Don’t wait till the last moment, participate in the fundraiser today by clicking this link: https://www.surveymonkey.com/r/PGLQDD6

In my April 2023 column I had reported on the annual branch managers’ meet that took place in Mumbai in March this year. Our discussions at the branch meet indicated that to transform our branches into more efficient entities that can help Sharekhan realise Vision 2025 as well as meet its enhanced obligations and responsibilities as a Qualified Stock Broker, we must educate our Branch Managers in the best practices of Branch Management. To achieve this, the management communicated the rules of branch management to all Branch Managers last month. What’s more, to reinforce the message to them, we also rolled out an e-mailer series called “The Dos and Don’ts of Branch Management” in the same month. The e-mailer series talks of the best practices of branch management in easy-to-consume bite-sized format. I hope all Branch Managers read the e-mailer series and adhere to all the dos and don’ts of branch management scrupulously.

Last month, we also refreshed Sherus’ knowledge of the four core management values of Sharekhan, ie Delegation, Empowerment, Ownership and Accountability. The knowledge of the four management values and how to practise them is very important for transforming Sharekhan into a loved financial service partner of India. The initiative was a precursor to Sharekhan’s feedback collection programme for 2023 that will be launched shortly with the Sharekhan Organisation Culture Survey 2023 – Management Values. We urge all Sherus to take the opportunity to tell us about their experience of these management values in our organisation.

That would be all for today, thank you for reading my column.

Best regards,
Jaideep Arora
Chief Executive Officer
Sharekhan