The scope of Paytm’s ambition seems to be as breathtaking as it is varied.
Barely a few weeks after launching Paytm Money, its mutual funds platform, Paytm is reportedly considering getting into the stock broking business. The company is expected to submit its application within two weeks to either of the two exchanges, BSE and the NSE, sources told Mint. And the exchanges seem eager for Paytm to start its brokerage business. “If they wish to apply for a broking licence, we would be delighted to welcome them,” said BSE CEO Ashishkumar Chauhan. Paytm, for its part, has refused to comment on the development.
It’s breakneck progress for Paytm, which had opened its mutual funds platform just earlier this month. Paytm would hope that investors would first dip their toes into equity investing through its mutual funds products, and then eventually move to picking and buying their own stocks. Stock broking is a lucrative business — the biggest discount broker in the country, Zerodha, makes profits of over Rs. 200 crore — and Paytm could hope that its own brokering arm adds to its bottom line.
The Indian stock broking landscape
While Paytm will have unmatched consumer recall and market breadth when it steps into the stock broking space, it won’t be easy going. Until a few years ago, India’s premier stock broking firms were large banks, including ICICI, HDFC and Kotak, who had clunky trading interfaces and high brokerage charge. But smaller firms like Zerodha and Upstox have stepped in since then, and brought with them slick technology, and discount broking prices. They’ve already disrupted the space to some degree — Zerodha, an relatively young startup, is already the third largest stock broker in the country, behind ICICI and HDFC.
Paytm, though, would seem to have some advantages to run a stock broking business. It is primarily a technology company, so it’s possible that it will be able to build a slick trading platform of its own. Also, it has the deep pockets to run a discount brokerage — companies like Zerodha had been able to wrest away market share from traditional companies because of their cheap broking prices, and it’s likely that Paytm will be able to match, if not further reduce, those prices.
Is Paytm spreading itself too thin?
Paytm’s stock broking business, if it does come about, will only be the latest vertical in its ever-expanding portfolio. Apart from its payments business, Paytm now does everything from flight, train and bus tickets, hotel bookings, movie tickets, gold purchases. It also has a large e-commerce arm in Paytm Mall, and has its own payments bank.
But several of Paytm’s ambitious bets aren’t quite working out as expected. Paytm Payments Bank stopped adding new customers in June after the RBI found irregularlies in how it stored in data and on-boarded customers. Paytm Mall risks being irrelevant as it occupices a minescule bit of market dominated by Amazon and Flipkart, and even Paytm Money currently languishes with a Play Store rating of 2.9 — its users are angry with long waiting lists and long KYC approval times. With Paytm supposedly looking to add a broking business on top of this all, one might wonder if the company is putting on too much on its plate.