India’s market infrastructure hits Rs 700 bn in FY25; Jefferies sees demat accounts racing to 304 million by FY28

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India’s capital market infrastructure sector generated revenues of over Rs 700 billion in FY25, led by brokers and stock exchanges, and its outlook will be shaped by faster growth in select segments (Citius), increasing diversification into adjacent businesses (Altius) and varying resilience to regulatory change (Fortius), according to a latest report by Jefferies.

Brokers accounted for nearly Rs 500 billion of FY2025 revenues, while exchanges contributed about Rs 200 billion, with the balance coming from depositories and registry and transfer agents (RTAs). The sector includes brokers, exchanges, depositories and RTAs, and has expanded alongside rising retail participation in equities and mutual funds.

Volumes and participation

Jefferies said revenues across capital market infrastructure companies remain closely linked to market volumes and investor participation. Over FY26–FY28, the brokerage estimates mutual fund assets under management (AUM) to grow at a 16% compound annual rate, driven by market appreciation and net inflows. Cash market average daily turnover (ADTO) is projected to grow at 15%, while F&O premium ADTO is expected to rise at 12%, reflecting moderation in derivatives activity after recent regulatory changes.

The number of demat accounts is projected to increase from 192 million in FY25 to 304 million by FY28, while mutual fund folios are estimated to rise from 235 million to 377 million. Mutual fund AUM is forecast to grow from Rs67 trillion in FY25 to Rs103 trillion by FY28.

Jefferies noted that younger investors are driving incremental participation, with investors below 30 years accounting for about 40% of the investor base in FY25, compared with roughly 20% in the pre-pandemic period. IPO activity has also contributed to new investor additions.

Citius: Brokers and exchanges seen growing faster

Jefferies expects brokers and exchanges to grow faster than other capital market infrastructure segments.

Among listed companies, Groww and BSE are projected to record the highest revenue growth over FY26–FY28, at 29% and 28% CAGR, respectively. CDSL is expected to grow revenues at 21%, KFIN Technologies at 19%, and CAMS at 13%.

BSE’s growth is linked to rising traction in index options, with Jefferies estimating its share of the index options market could rise to around 35% by FY28, supported by higher utilisation of co-location racks and continued options activity.

Groww’s growth is driven by expansion across products including margin trading facilities, commodities, bonds and wealth management, as well as increasing client vintage and higher product adoption.

Altius: Diversification expands revenue mix 

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Jefferies said brokers and RTAs offer the widest scope to expand into adjacent businesses, supported by strong operating cash flows.

For Groww and KFIN, new initiatives and non-primary businesses are expected to contribute 20–25% of revenues by FY2028, compared with low single-digit shares in FY25. Groww’s diversification includes margin trading, commodities, wealth management, loans against securities and platforms for active traders.

RTAs such as CAMS and KFIN are expanding beyond mutual fund RTA services into AIFs, PMS, fund administration, KYC services and international markets. Jefferies expects KFIN’s international business to account for about 17% of revenues by FY28, up from around 5% in FY2025.

Fortius: Regulatory exposure varies across segments

The brokerage highlighted that regulatory exposure is uneven across the sector. RTAs were identified as having lower regulatory risk, given limited dependence on derivatives-linked revenues.

Brokers and exchanges remain more sensitive to derivatives regulation. Jefferies estimates that a 10% decline in options revenues could reduce earnings by 7–8% for brokers and exchanges, assuming fixed costs remain unchanged. Potential changes to weekly index options or clearing corporation ownership structures were cited as key risks.

At the same time, regulatory efforts aimed at deepening cash equity markets could support brokers and depositories. Cash equities contribute roughly 30% of transaction revenues for brokers and about 20% of consolidated revenues for depositories, according to the report.

Market structure and valuations 

Jefferies noted that, except for broking, most capital market infrastructure segments operate as duopolies, including exchanges, depositories and RTAs, with high switching costs limiting churn.

In the mutual fund RTA segment, the top five fund houses account for about 80% of CAMS’ serviced AUM and around 70% for KFIN, limiting the likelihood of large-scale in-sourcing.

Valuations show clear differentiation across the capital market infrastructure space when viewed against growth. NSDL and CDSL trade at the highest FY27E P/E multiples of 49x and 46x respectively, despite comparatively lower FY26–28E EPS CAGRs of 20–22%, reflecting their quasi-monopolistic positioning, annuity-like revenues, and high cash-flow visibility. BSE and Groww are valued at 36x and 34x FY27E P/E, supported by superior earnings growth of 33–35% CAGR, indicating a more balanced growth–valuation trade-off. CAMS trades at 31x FY27E P/E with a relatively modest 17% CAGR, suggesting the market prices in stability rather than high growth. KFIN commands a richer 42x multiple despite a 20% CAGR, likely factoring in operating leverage and share gains. Angel One stands out, trading at a discounted 19x FY27E P/E despite a healthy 25% EPS CAGR.