The Exchanges

Q And how has this market been growing like for the last 10 years? Because you have been a participant in this market for 10 years.

A Yeah. So I think, uh, you know, the cash volumes are generally somewhat correlated with how the index kind of performs, you know, um, and, uh, again, retail is only a small portion of this, right? It's a, it's a sub-twenty percent. Of course that itself has grown. So when we first came to India in like 2000 eight-ish equity participation in India, which is basically the number of people in India that have DMAT accounts was like sub-two percent. Um, in 2012, when we started the retail business, uh, was again, sub two percent. In 2016, before I had a launch, it was still sub two percent. And now zero, pretty much almost like flattish growth, you know, and now we're at a, you know, six, six percentage kind of a number. So, uh, it's almost tripled right in the past a few years, which is incredible, but we still have very, very long ways to go. So in this timeframe, It's not just retail, it's also picked up. You know, institutional volumes have also gone up. Um, you know, companies like LIC have also started upping their, you know, their, their buys on the stock market. So all these, everyone's volumes kind of picked up, right? And, um, retail share itself has also grown. Um, and it's still, what I'm trying to say is it still has long ways to go.

AI assessment note: “equity participation in India... was like sub-two percent. And now we're at a six percentage”

Q one is growing phenomenally well each year. I think each one is growing like 40, 50% at least every year. Uh, uh, you guys have crossed thousand crores in yearly revenue. Uh, Zerodha crossed that milestone a few years back. I think Grow is also touching, uh, that milestone. So what do you think, right? Uh, uh, Is, is the reason that a single market can accommodate so many players.

A Yeah. We get asked this all the time. Um, I think a lot more, I would say, right? I think this is not just even a three player market. Um, like I'm from the US, you know, the US has had an incredible growth journey of its own for the past, 3040, 50 years. And there are many players of, you know, huge size. They each have multiple trillion dollars of AUM. I think in our industry also, the relationship is with the customer, you know, and what I mean by that is there's not really so much economies of scale. So it's important that we focus on the customer and as India's equity participation, um, really comes of age, we stand to benefit from that like others will as well.

AI assessment note: “there's not really so much economies of scale. So it's important that we focus”

Q And why do Indians prefer safe haven, uh, with respect to other countries?

A I think part of it is also the safety net that India has perhaps in the past not had as much of. Like in the US, you have this thing called the, you have very, um, high levels of pension, you know, pension funds, et cetera, et cetera. It's a big social safety net, right? Um, which perhaps is starting to come up in India now more and more. Employers are starting to do it. Um, but I think, I think historically it lacked that. And because of that, people wanted to Save for a rainy day. And, uh, bank fixed deposits are like, you go to the bank, they'll, they'll cross sell you, you know, keep your money in a fixed deposit and get indeed six percent, you know, like a return. So you get, you get excited and you sign up, but it's not even beating inflation, right? These interest rates are linked to ultimately inflation numbers. And, um, and it's not even beating inflation. So people are getting smart now. They're realizing that, you know, the same 10 rupees now is not worth as much. So how do I beat inflation? Then the next step is invest in equity markets.

AI assessment note: “part of it is also the safety net that India has perhaps in the past”

Q So except from Aadhaar and UPI, uh, what's changed for you as an entrepreneur? Why you are saying that 2023 is the best time to be an entrepreneur in India? Because you started as an entrepreneur here 15 years ago.

A Yeah. Yeah. I think also it's the confidence. Like I think, you know, see, as a business, what do you want? You want a large address on market size. You want, Pools of capital that you can fundraise from. You want a talent base that you can hire from. All these things are there, right? And more, right? There's no country in the world today that's growing at the clip India is growing at. Because of our growth rates, you know, there's so many things that are opening up, you know, like year on year on year for you. New opportunities are opening up year on year for you. As GDP per capita increases and as, you know, more and more People enter the middle class. Um, there's more new business opportunities, you know, that open up. So it's all about, and also we've just seen, you know, the kind of caliber of entrepreneurs that are coming out now is very different than what I would have found say, 10 years ago in India. You know, the confidence that people have here is amazing. You know, it's even more than what I find when I go to the US, for example. So like, it's just like everything is there. Like what else would you want? Right. That's, I'll ask you the flip question. Like what else would you possibly ask for? Right. There's deep pools of capital. You have a great business idea. There's a lot of people that are willing to fund your business.

AI assessment note: “caliber of entrepreneurs that are coming out now is very different than what I would have found”

Q Did you lose any money in that out of the three and a half?

A No, luckily we didn't, you know, um, my brother Raghu was actually very instrumental in this. He recognized that a lot of, uh, weird things were happening in the markets and we pulled out all of our capital and we were luckily, uh, we, we didn't lose anything. And within like 10, 15 days, I remember everything just exploding essentially. Um, but we grew up in, we, we would visit India, you know, growing up, I think our parents did a great job of just, you know, keeping us in touch with, Uh, with Indian culture and stuff, so every couple years we'd be these NRI kids that would come and, you know, make the rounds across all of our relatives.

AI assessment note: “No, luckily we didn't, you know, um, my brother Raghu was actually very instrumental”

Q So, so if you have to advise an entrepreneur to list on a NSE or BSE today, and for example, let's say a company is profitable like you, right? What would be your advice on at what revenue, what valuation to list on, on these stock exchanges?

A Yeah. So I think, um, like historically, right, if you look at, I can tell you about the US, um, so look at Amazon. Right? Like a Facebook. When an Amazon or Facebook went public, um, they were not making that much revenue. Right? Like I think maybe two fifty million or something like that is when they probably, uh, went public because of course the private markets, um, were not at the same levels as they are today. Right? The depth was not there. Um, then, you know, big private equity outfits and private equity outfits came in. VC funds and PE funds came in to start investing into companies and allowed them to basically remain private for much, much, much longer. Um, but I think, you know, going forward, I think you'll see a shift, uh, back to how it was, is my belief. You know, people, um, like we want to list at some point because, uh, we're, uh, you know, we exist because of stock markets.

AI assessment note: “I can tell you about the US... maybe two fifty million or something”