Key Financial Performance (Q2 FY27)

Consolidated Performance:

  • Gross Revenue: ₹14.3 billion, up 18.9% Year-over-Year (YoY)
  • Operating Profit: ₹4.9 billion, up 52% YoY
  • Profit After Tax (PAT): ₹3.35 billion, up 58.2% YoY
  • Consolidated Operating Margin: 45.1% (vs. 34.5% in Q2 FY26)

Standalone Performance:

  • Standalone Operating Profit Margin (OPM): 48.9%, exceeding the company's guided range of 40-45%.
  • After normalizing for seasonal IPL expenditure and ESOP-related reversals, the underlying consolidated OPM was stable at 43.8% vs. 43.6% in Q1 FY27.

Revenue Composition:

  • Broking Income: Contributed ~55% of total revenue (down from nearly 60% a year ago).
  • Interest Income: ₹5.1 billion, up 34% YoY and 9% sequentially.
  • Distribution Income: Showed healthy growth, supported by credit distribution and IPO activity. It now contributes ~5% to total revenue.

Operational and Business Highlights

Client Metrics:

  • Total Client Base: Crossed 40 million.
  • New Client Additions: ~1.5 million in Q2, an 11.6% increase from Q1.
  • NSE Active Client Base: Grew, leading to a month-over-month expansion in active client market share throughout the quarter.
  • Funded Clients: 437,000, a nearly 30% increase YoY.

Client Funding Book (Margin Trading Funding - MTF):

  • Average Client Funding Book: ₹74.5 billion, a lifetime high and up 40.5% YoY.
  • Closing Book: Reached a record ₹82.1 billion.
  • Portfolio Quality: 84% of funded clients have exposures below ₹100,000; 82% of the book is less than 30 days old. Delinquencies are negligible.

Market Share:

  • Overall Equity Retail Market Share (based on option premium turnover): 19.7%.
  • Derivatives Retail Turnover Share: 22.1% for the quarter, rising to 22.5% in September.
  • Commodities Turnover: More than doubled YoY, though market share moderated to 44% due to significant market expansion and new entrants.

New Business Verticals:

  • Credit Distribution: Achieved its highest-ever monthly distribution in September, reaching an annualized run rate of ₹33 billion. The company launched an early beta of its Loan Against Securities (LAS) offering and upgraded its probability of default models.
  • Wealth Management (Ionic Wealth): Assets Under Management (AUM) stood at ₹160 billion, up 19.1% quarter-over-quarter (QoQ).
  • Asset Management: AUM stands at nearly ₹6 billion. The company is evaluating a comprehensive strategy, including hiring a new leader.
  • Global Investing: Received authorization to operate as a Global Access Provider in the IFSC (GIFT City) and is piloting U.S. stock trading for its clients.

Capital Structure & Dividend

  • Net Worth: Increased to ₹67.1 billion from ₹58.3 billion a year ago.
  • Borrowings: Stood at approximately ₹75.5 billion, largely to support the expansion of the client funding portfolio.
  • Dividend: The Board approved a second interim dividend of ₹1.4 per share. The record date is set for October 22, 2026.

Management Commentary & Guidance

Margin Guidance: Management reiterated confidence in sustaining a standalone operating margin of around 45% on an annual basis, acknowledging potential quarterly gyrations. The guidance subsumes all expenses, including IPL sponsorship costs.

Cost Guidance: The company maintained its employee cost guidance (including ESOPs) at approximately ₹11 billion for FY27, which is flat year-over-year.

Strategic Outlook: Management emphasized the strategy of diversifying revenue beyond broking, aiming for the distribution business to reach low double-digit revenue contribution in the next 2-3 years. They highlighted the scalability of their platform and the operating leverage inherent in their model.

Regulatory Environment: The call addressed the impact of recent SEBI regulations on market volumes but noted a rebound in September, with Average Daily Orders (ADO) reaching 5.8 million, up nearly 12% from August. Management viewed the recent SEBI circular on the Closing Auction Session (CAS) positively, expecting it to provide clarity and create tailwinds.

Q&A Session Key Points

  • Client Activation & Acquisition: Management focuses on activation rates and NSE active clients rather than just gross additions. Activation trends are strong, and client acquisition cost (CAC) is under control.
  • Employee Costs: The benign employee cost in Q2 was attributed to increased productivity from a return-to-office policy and associated attrition, which is now stabilized.
  • MTF Book: The book is predominantly (85%+) in 'Blue Chip' and 'Good' category stocks, and the company is not currently looking to increase lending rates despite a rising interest rate environment.
  • New Business Drag: The EBITDA margin drag from new businesses (Wealth, AMC, etc.) is estimated at 3.5-4%.
  • International Broking: The U.S. stock trading pilot is live for some customers, operated through GIFT City in partnership with a U.S. brokerage firm.

Participants

The call was hosted by Group CEO Ambarish Kenghe and Group CFO Vineet Agrawal, along with numerous other senior executives from various business verticals including technology, risk, compliance, strategy, and the heads of Ionic Wealth. Chairman Dinesh Thakkar was absent.