Paytm Money's user base dips post-RBI action; Dhan booms with 330% growth

Brokerages launch innovative features to promote responsible derivatives trading

Paytm Money’s active user base dropped 2.5% over the past five months, even as it saw a 21.8% increase year-on-year, as per NSE data.

As on May 2024, the stock trading platform had 7.8 lakh active users, down from its peak of about 8.1 lakh users in January.

However, the platform has managed to register an overall growth of 21% in the user base in the last 12 months, adding almost 1.4 lakh users.

'Active client' means the client who has traded at least once in last 12 months.

Competitors, including Groww, Zerodha, Angel One and Upstox clocked 90%, 20%, 48% and 19% jump in their user base, respectively.

Infact, Groww became the largest platform in terms of active user base, crossing 1 crore mark in May, surpassing its arch rival Zerodha, which has about 76 lakh clients.

The drop in Paytm Money users can partially be attributed to effect on its associate subsidiary, Paytm Payments Bank (PPB), which faced RBI’s scrutiny in February.

Although the restrictions on PPB did not directly affect Paytm Money, which functions as an independent entity, many of its users faced challenges in switching their default primary PPB accounts to other banks in February, leading to drop outs.

Moneycontrol had previously reported how traders and investors remained stuck with the process claiming that the option remained blocked for them on the app.

Aggravating this, the Central Depository Services India (CDSL), the largest securities depository in the country, was reported to be examining Paytm Money's procedures for customer verification.

Recently, Paytm Money also underwent a leadership overall with CEO Varun Sridhar transitioning to associate entity-Paytm Services Private Limited-to build the distribution of mutual funds and wealth management products, in a CEO's capacity. He was with the firm for almost 4 years.

Rakesh Singh, who was previously the CEO of the stock broking business at Fisdom, is now leading the charge.

Paytm Money had reported Rs 42 crore net profit while its revenue almost doubled to Rs 131 crore during FY23, according to the filings with the registrar of companies. Its major source of income is from the brokerage fees it gets from customers.

Dhan speeds up

Besides a strong growth among top names, Mumbai-based stock broking app Dhan is fast catching up with the peers registering a 330% growth in active user base since May last year.

From 1.3 lakh active users, Dhan’s user base surged to 5.6 lakh by May 2024, making it one of the fastest-growing platforms in the sector.

Floated by Paytm Money's former chief executive Pravin Jadhav, the stock trading and investment platform recently launched mutual fund investments on the back diversifying its offerings and attracting long-term investors.

A notable trend in the industry, stock trading platforms have been attempting to expand their revenue streams via Asset Management Company (AMC) business, insurance advisory, loan against securities, payments etc., as competition intensifies. 

For instance, Groww has expanded into long-term investments through mutual funds, lending, and UPI payments service. Meanwhile, Angel One is working on building its fintech super app while Zerodha declared its entry into AMC business.

In May, Upstox launched insurance distribution business and onboarded HDFC Life as the first insurer on its platform.

All the four firms remain profitable.

Dhan claims to be Ebitda profitable since December last year.

Its last fundraise came in January 2022 with BEENEXT, Mirae Asset Venture Investment, 3one4 Capital, and Rocketship.vc. pumping $22 million.

A host of entrepreneurs and CEOs including Kunal Shah (Cred), Kalyan Krishnamoorthy (Flipkart), Sameer Nigam and Rahul Chari (PhonePe), Vidit Aatrey and Sanjeev Barnwal (Meesho), Amrish Rau (Pine Labs), Sujeet Kumar (Udaan), Jitendra Gupta (Jupiter) and Sandeep Tandon (Whiteboard Capital) have placed their bet on the venture.

Within months of starting up, holding entity Raise had acquired Mumbai-based stockbroking firm Moneylicious Securities in August 2021.

Through the acquisition, Raise secured the requisite licences to become an integrated online stock broker.

The company also holds partnership with US-based charting platform TradingView to allow users to trade directly through charts in equity, options and futures for indices equity, commodity and currency.