Discount brokerage Upstox recorded a 44 per cent growth in broking income in FY2023, compared to FY2022. Meanwhile, the company also achieved breakeven in FY2023 and reported revenues of over Rs 1,000 crore. Upstox also generated positive net cash for FY2023, producing operating cash of around Rs 130 crore in Q4. In an interaction with Business Today, Ravi Kumar, Co-Founder and CEO, Upstox shared his insights on the company’s balance sheet and also explains how the Indian Premier League (IPL) sponsorship helped Upstox to transform in the past three years. Edited excerpts:
Business Today: How was the year FY23 for Upstox in terms of cash reserves?
Ravi Kumar: The company has a sound balance sheet with cash reserves of over Rs 1,000 crore at the end of FY2023. In the recently ended fiscal year, Upstox also surpassed the milestone of 10 million unique customer codes.
Business Today: Why did you invest in IPL sponsorship?
Ravi Kumar: This is our last year of IPL sponsorship. We have received a whole lot of goodness from IPL in the past three years with increased brand awareness. The goal of Upstox is to enable hundreds of millions of Indians to reap the benefits of India’s remarkable economic expansion. This is why we have invested in prominent global platforms like the IPL and the ICC. The partnership with IPL has helped us boost brand recognition and loyalty, contributing to over 30 per cent revenue growth in FY23 compared to FY22.
Business Today: Can you throw some light on the company’s expansion plans?
Ravi Kumar: We are already a family of over 1 crore Upstox users. At present, less than 5 per cent of Indians invest in stocks compared to 50 per cent of Americans and 20-30 per cent in other nations. Therefore, we still have a long way to go. By giving Indians the resources they need to make educated investment and trading decisions, Upstox seeks to maximise India's investment potential and empower Indians by providing the necessary tools to make informed investing and trading decisions.
In 2024, our focus will be to make significant progress towards our goal by swiftly expanding our top line and keeping a positive cash flow. We stay dedicated to providing a wide variety of investment solutions and developing into a reliable partner for all of our clients' financial requirements.
Business Today: What are the recent developments in Upstox? How are you creating differentiation in the market?
Ravi Kumar: Our newest offering is ‘Upstox Invest’, a separate mode for investors on our platform. With this, our objective is to create an unparalleled investment experience for our customers by focusing on long-term wealth creation, simplicity, and transparency.
Our research showed us that people want to invest, but are overwhelmed by the sheer number of investment options. Upstox for investors is the solution to that issue.
Upstox for investors is a unique mode within the app that eliminates trading lingo and offers a number of tools to make investing as easy as possible. First, the separate mode makes sure that investors don’t have to navigate through trading jargon while investing. Second, the app includes integrated learning resources to provide users with information before they invest. Thirdly, Upstox provides Top Funds badges for the top mutual funds, curated after a careful examination of risk and return factors, so users can make an informed choice. Fourth, to encourage confident stock investing, the platform has a simplified stock analysis page with analyst ratings, smart lists, UpRanks, checklists, and fundamentals.
The platform also offers and recommends index funds as a low-cost, simple, and long-term way to combat inflation and increase wealth. All mutual funds on Upstox are direct funds, and we don’t charge any fees or commissions, indicating our commitment to our customers’ best interests.
We are confident that Upstox Invest’s user-friendly and fun investing experience will radically simplify investing and help users make informed selections and create shrewd financial habits
Business Today: How difficult is it for Upstox to become a number 1 player in the broking industry?
Ravi Kumar: The No. 1 position in an industry can be ascribed using numerous metrics. As I said earlier, our revenue has experienced a substantial increase in FY23 compared to FY22, especially when compared to our peer set. We have also become cash flow positive. Having said that, we are not in a race to become number 1. Our objective is straightforward - Upstox is dedicated to tapping into India's growth potential, and everything we do is from that long-term perspective. We are inspired by the growth stories of top-tier investment platforms in the US, such as Charles Schwab, Fidelity, Vanguard, and IBKR. All of these have been in operation for over 40 years and continue to add accounts at a robust pace. These firms have assisted millions of Americans in benefiting from the growth of the US equity markets.
We believe Upstox shares a similar story. We are invested in India’s growth story which we believe is just beginning to unfold. Our primary focus remains on solving one crucial problem: how to empower millions of people across India to benefit from the nation's economic growth story.
Business Today: How do you see the broking industry going ahead?
Ravi Kumar: The Indian broking industry is constantly evolving, thanks to foresighted regulators who have moved in lock-step with technological advancements. The seeds for the growth we have already witnessed were sown when our government and regulators mandated steps like 100 per cent demat account coverage. I believe recent regulatory interventions will lay the foundation for the next phase of growth of the capital markets.
I am referring here to the mandates for PAN-Aadhaar linking of all demat accounts or the new move to provide ASBA-like facilities for secondary market trading. All of these are instances of the regulator leveraging technology to reduce frauds and ring-fence investor funds. This will effectively put the trader or investor in charge of their money and that will help build trust and boost investor confidence over the long run. For retail businesses like ours, where our goal is to motivate and encourage the next generation of Indians to start investing, this is very advantageous. It is critical to constantly promote credibility and trust. This is what will help the industry grow and mature On the tech side, online trading platforms, the use of artificial intelligence and machine learning to analyse market data and make investing decisions have become more popular in recent years.
Going forward, I expect brokerages to continue to invest more in technology and data analytics in order to offer clients more individualised financial advice and trading choices. I also expect more efficient use of social media for investment education and protection.
Business Today: How robust is your technology as compared with your competitors?
Ravi Kumar: We don’t believe in comparisons. Rather, I would say, we benchmark ourselves with the best, globally, and our aim is to provide best-in-class services to the Indian investor. To this end, we are consistently investing in technology in multiple areas.
We are conscious of the need for significant structural and security modifications which is why we are consistently investing in strengthening our security and privacy systems. We believe no trader should ever lose out on a profit because systems couldn’t back them up. This is why we are scaling across multiple data centres in regions across India and leveraging monitoring tools to ensure 99.9 per cent uptime to our services. I have already spoken at length about our new feature rollout earlier. We are also leveraging data science and AI to power and develop tools to make investing/ trading simpler for the customer. AI and ML algorithms are also being used to study client behaviour patterns. We then leverage this to educate them to make better investment decisions.