India's listed brokers and exchanges delivered robust March quarter earnings, driven by a surge in Margin Trading Facility (MTF) and favorable base effects. According to reports from The Economic Times, among listed brokers including Billionbrains Garage Ventures (Groww), Angel One, IIFL Capital Services and Anand Rathi Share & Stock Brokers, standalone revenues rose between 3% and 23% in the March quarter from October-December, while standalone profit after tax grew 11% to ₹43 crore. However, Motilal Oswal Financial Services reported a contrasting performance with revenues falling 23% sequentially and a loss of ₹48.9 crore in the quarter.
Exchange operators also demonstrated strong financial performance during the quarter. As reported by The Economic Times, the consolidated profit after tax of BSE and NSE rose 33% and 19% respectively, while revenues grew 26% and 27% during the quarter. According to Ashish Nanda, chief digital business officer at Kotak Securities, the strong fourth quarter performance was supported by a favorable base effect after last year's decline in derivatives volumes. Higher market volatility around the Budget period, strong commodity trading activity as gold and silver prices peaked, and elevated VIX levels amid the US-Iran conflict also drove volumes higher.
The improvement in earnings was significantly aided by diversification beyond core broking income, particularly through distribution and margin trading funding (MTF). According to The Economic Times, brokers have aggressively scaled MTF books, with Roop Bhootra, whole-time director at Anand Rathi Share and Stock Brokers, noting that MTF provides leveraged cash equity exposure with broker-funded margins, generating interest income with brokerage revenue that hedges against volatility in broking income. Higher trading activity, particularly in options, also supported earnings momentum, with NSE reporting that its average daily traded volume for equity options (premium value) rose 43% in March compared with the December quarter.
Brokers are evolving into 'pseudo-NBFCs' by expanding beyond traditional broking services. As reported by The Economic Times, Pranay Aggarwal, director and CEO of Stoxkart, highlighted that products like algo trading, where brokers charge brokerage and subscription or API fees, are gaining traction. Brokers are also expanding into wealth management, insurance, online FDs and other offerings to reduce the seasonality and volatility of pure-play broking income. This diversification strategy helps offset potential moderation in futures and options trading volumes.
