New-age stock brokers’ bull run hits a bump; Elevation sells more stake in Xpressbees

By Daisy On Apr 28, 2023

For new-age stock broking firms which grew exponentially during Covid-19, the past year has been punishing. This and more in today’s Morning Dispatch.

Also in this letter:
■ Elevation sells 3% stake in Xpressbees
■ Won’t notify govt fact-check unit till July 5: Centre to Bombay HC
■ Wipro, TechM post muted numbers, LTIMindtree’s Q4 profit flat

Online stock brokers suffer major loss of active users

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Hi, this is Pratik Bhakta in Bengaluru. Today, I take a close look at the churn in active users for India’s online stock broking sector. Tech-backed discount brokers which gained immensely during the pandemic have been hit over the past year.

What’s driving the news? Tiger Global-backed Upstox has seen around 2 million traders go inactive in the past year, while nearly 200,000 traders left Zerodha during the same time. Even 5Paisa lost 1 million users. Groww and AngelOne have bucked the trend and have grown their active trader base positively in the same time frame.

Why does it matter? This means that the incentive-driven approach to acquire trading customers has backfired in a way. People lured by glitzy IPL ads or through stock tips from Telegram channels realised the dangers of investing irrationally and quit the market. It also shows that consumers want all investment options from their broking platforms, not just daily trading. They want superior tech-led experiences and will not settle for anything less.

The bottom line: Interestingly, even as the number of active traders shrunk, these platforms reported strong revenue growth in the last financial year. Upstox clocked more than Rs 1,000 crore in revenue while Zerodha clocked Rs 4,300 crore. But if this trend continues, it could become a matter of concern for the brokers. Nithin Kamath of Zerodha expects a dent of 30-40% to the company’s revenue this year if the exodus continues, he told ETtech recently.

Elevation sells 3% stake in logistics startup Xpressbees to Malaysia’s Khazanah

Hi, Digbijay here in Bengaluru. Today, I am reporting on Malaysian sovereign wealth fund Khazanah Nasional picking up close to 3% stake in the Pune-based Xpressbees for about $40 million in a secondary share sale. Elevation Capital, an existing investor in the ecommerce focussed logistics firm has sold these shares to Khazanah.

Tell me more: Elevation Capital – an investor in firms like Swiggy, Meesho and Paytm – has been divesting its stake in Xpressbees to return capital to its investors. From about 13% stake earlier, it will now have about 2% stake remaining in the firm.

Clocking partial exit: Elevation was allotted the stake in Xpressbees after it was spun out from its parent FirstCry in 2015. The VC fund invested about $4 million in the firm and has fetched returns to the tune of around $120 million in the last 12-18 months. It sold shares worth $55 million in the $300-million funding round in Xpressbees when it turned a unicorn last year. Later in August, it sold another $25 million worth of shares to a fund managed by Avendus.

Secondaries in focus: The latest transaction at Xpressbees is in line with recent high-profile secondary deals being executed across large internet firms like eyewear retailer Lenskart’s deal with Abu Dhabi Investment Authority (ADIA) and mother and baby products retailer FirstCry’s ongoing talks with sovereign funds where SoftBank is a seller. ETtech also reported in January, that two of the early backers of Flipkart — venture fund Accel Partners and New York-based Tiger Global are in talks to sell their remaining stake in the ecommerce company to its parent Walmart.

Won’t notify government fact-check unit till July 5: Centre to Bombay HC

Wont notify govt fact-check unit till July 5

The government on Thursday told the Bombay High Court it would not notify the body for fact-checking government-related news till July 5. The Ministry of Electronics and Information Technology (MeitY) made this submission in response to a plea filed by political satirist Kunal Kamra, who challenged an April 6 notification that spoke about setting up a fact-checking unit.

What’s driving the news: The fact-checking body is proposed to be set up to cross-check and verify all information about the government present on social media platforms. It will send relevant notices informing intermediaries of content that has been deemed misinformation or disinformation by it.

Kamra’s plea: Kamra alleged the rules which empower the central government to set up the fact-checking unit make the government “a judge and prosecutor in its own cause, thus violating one of the most fundamental principles of natural justice”.

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Wipro, TechM post muted numbers, LTIMindtree’s Q4 profit comes in flat

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In line with sombre earnings from its peers, IT majors Wipro Ltd, Tech Mahindra and LTIMindtree reported subdued numbers on Thursday.

Wipro posted a consolidated net profit of Rs 3,074 crore for Q4 FY23, down 0.4% from Rs 3,087 crore in the year-ago period, while Tech Mahindra reported a 26% year-on-year drop in net profit to Rs 1,118 crore. LTIMindtree also reported flat net profit of Rs 1,114 crore.

Wipro financials: Revenue from operations during the reporting quarter rose 11% year-on-year (YoY) to Rs 23,190 crore. The company’s board has approved a buyback of shares through a tender offer, at Rs 445 per share.

TechM numbers: The IT major’s net profit was lower than ET Now Poll estimates of Rs 1,260 crore. Revenue from operations during the reporting quarter rose 13.2% YoY to Rs 13,718 crore. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) declined 3.2% YoY to Rs 2,021 crore.

The board recommended a final dividend of Rs 32 per share, taking the total dividend for FY23 to Rs 50 per share, the company said in an exchange filing.

LTIMindtree earnings: The company reported net profit of Rs 1,114 crore for the fourth quarter, which is flat compared with Rs 1,108 crore clocked in the corresponding quarter of last year.

Revenue from operations during the reporting quarter surged 22% to Rs 8,691 crore as against Rs 7,128 crore in the same quarter a year ago.

The Board has also recommended a final dividend of Rs 40 per equity share for the financial year ended March.

ET Ecommerce Index

We’ve launched three indices – ET Ecommerce, ET Ecommerce Profitable, and ET Ecommerce Non-Profitable – to track the performance of recently listed tech firms. Here’s how they’ve fared so far.

ET Ecommerce Tracker_Returns Comparison_27 APR_2023_Graphic_ETTECH

Madras HC restrains Google from ejecting Bharat Matrimony app from Play Store

Google, which has 94 dominance in Play Store, can now face regulations which will force them to give equal space to apps of other competitors_Google Play store_THUMB IMAGE_ETTECH

Google will not be able to divorce Bharat Matrimony for at least another month. Granting an interim injunction in a case filed against Google by Matrimony.com, which owns the Bharat Matrimony platform, the Madras High Court on Thursday directed the tech giant not to delist the Indian platform’s app from its Play Store until June 1.

What’s driving the news? Matrimony.com had approached the court alleging that Google was forcing app developers to adopt its user-choice billing (UCB) system, and charging a commission at the rate of 11-26%, even if payments were being made by users through non-Google payment options.

‘Great relief’: Murugavel Janakiraman, CEO, Matrimony.com, called the injunction a “great relief”.

Catch up quick: The ruling is significant given that Google’s new in-app purchase billing policy has been disputed with the Competition Commission of India (CCI) as well. The competition regulator, under directions from the Delhi High Court, is currently hearing complaints by startup lobby Alliance of Digital India Foundation (ADIF) — of which Matrimony.com is a member.