Broking Industry Expected To Report Strong Growth

The broking industry is poised to report a strong growth supported by the favourable capital markets and record transaction volumes, ICRA has said in a report. ICRA expects the broking industry to clock a record broking income of Rs. 27,500-28,500 crore in FY2021, registering 30-35% growth (Rs. 21,000 crore in FY2020) and outperforming ICRA's earlier estimate of Rs. 23,000 crore.

"The industry growth rate is expected to moderate, with the industry broking income estimated to grow to Rs. 29,500-30,500 crore (YoY growth of 7-8%) in FY2022. The broking segment is expected to witness an improvement in profitability supported by an increase in the cash and retail segment turnover as well as economies of scale.

The industry profitability level is expected to be supported by the growing retail share coupled with the increase in interest income through margin funding, provided the credit costs remain under check, and the distribution of financial products despite pricing pressure and contracting yields.

While the industry is expected to clock a healthy growth on an aggregate basis, small-and-mid-sized brokerage companies are expected to face greater operational and funding challenges, which could have a bearing on their performance in terms of growth and profitability," ICRA has stated in its report.

According to the rating agency, the trend of consolidation is likely to continue. "While the industry is expected to clock a healthy growth on an aggregate basis, small-and-mid-sized brokerage companies are expected to face greater operational and funding challenges, which could have

a bearing on their performance in terms of growth and profitability, ICRA has stated.