Also in this letter:
■ Binny Bansal’s ecommerce startup OppDoor
■ Catamaran on startup valuations in 2024
■ Pay aggregator licence for Tata Pay, DigiO
Fintechs add 1.3 million new mutual fund SIPs in November
Fintechs have emerged as the top distributors of mutual funds, mirroring the success of the likes of Zerodha in the online stock-broking space.
Driving the news: Groww, AngelOne and PhonePe are among the leading players which are adding the maximum number of new SIPs (systematic investment plans) every month. Wealth tech major Groww issued more than seven lakh new SIPs in November alone, while AngelOne generated more than two lakh and PhonePe over a lakh new SIPs in the same month. This is according to data from asset management companies shared exclusively with ET and the Association of Mutual Funds of India (AMFI).
Go deeper: Data showed that in November, 30 lakh new SIPs were generated by the entire industry. Industry estimates said that around 42% of these SIPs were issued through fintechs like Groww, Paytm Money, AngelOne and others.
The only two traditional players in this space are NJWealth and State Bank of India, which are both generating more than a lakh new SIPs per month. The likes of HDFC Bank, ICICI Bank and Axis Bank saw between 30,000 to 50,000 new SIPs being created.
Advantage fintechs: Fintechs are playing on their distribution heft to grab market share in the wealth management space. For a player like PhonePe, which has a massive user base using its payments service, mutual funds investments is a good ancillary service to keep users sticky. For Groww, mutual funds is the hook through which it tries to get investors to eventually participate in the equities market directly.
IT stares at slowest quarterly revenue growth in a decade
India’s technology behemoths are gearing up for a period of tempered growth.
Driving the news: Analysts anticipate the December quarter to mark the slowest revenue expansion for these technology players in a decade. However, the impact is expected to be uneven, with a potential K-shaped trajectory reflecting disparities in client concentration and domain strengths across the industry.
Earnings season: The third quarter results season will begin with TCS and Infosys announcing their results on January 11, followed by HCLTech and Wipro on January 12.
HCLTech to lead peers: As per brokerage firm Jefferies, HCLTech is likely to outpace others with a 2% quarter-on-quarter (QoQ) constant currency revenue growth in its service business. “LTIMindtree, TCS and Tech Mahindra are expected to report revenue growth/degrowth of 1.2%, -0.4%, and -1.1% QoQ, respectively,” it said. The brokerage expects a median revenue growth of 0.7% on quarter with tier 1 IT majors likely to report revenue growth in the range of -2.7 to 4.5%.
Leadership churn continues: Analysts will be looking for some signs of stability and contingency plans from the IT companies. The quarter saw Infosys, Wipro, and Tech Mahindra reporting senior leadership churn and accompanying legal tangles.
Also read | Should Indian IT companies be concerned about Accenture’s Q2 guidance?
Flipkart cofounder Binny Bansal launches ecommerce startup OppDoor
Flipkart cofounder Binny Bansal has set up a new ecommerce venture named OppDoor, a software services platform, which will help emerging ecommerce brands expand globally.
What does it do? OppDoor website says it is a ‘managed services platform for global expansion’. It will help ecommerce brands by offering them end-to-end services on global markets, customer behaviour, taxation and compliance, partnerships and third-party vendors.
Flipkart connect: Bansal has onboarded former Flipkart executives for the venture, people aware of the matter said. He exited the online retail major fully last year by selling his remaining stake to Walmart. Binny Bansal cofounded online marketplace Flipkart with Sachin Bansal in 2007.
What are the details? Bansal’s new startup is currently housed under a Singapore-registered entity, which was earlier named Three State Ventures. Bansal’s venture fund is called Three State Ventures.
Background: Unlike Sachin Bansal, Binny Bansal held on to his stake after stepping down from the group CEO role in 2018. In July last year, he is estimated to have made about $650 million through his stake sale to Walmart. When Flipkart raised $3.6 billion in 2021, Bansal had sold a part of his stake for $200-250 million to Chinese internet behemoth Tencent. He no longers holds any shares in the ecommerce firm.
Also read | Flipkart founder Binny Bansal may invest $25-30 million more in Ankit Nagori’s Curefoods
Startups likely to see further valuation dip in 2024: Catamaran’s Deepak Padaki
Startups must brace for further down rounds (raising funds at lower valuation compared to their previous funding round) in 2024, Deepak Padaki, president, Catamaran Ventures told ET.
On Catamaran’s next bet: In 2023, we built a thesis around investing in manufacturing in India – not so much the final equipment makers but growing the supply chain below it. We are looking at startups with intelligent manufacturing, deeptech on material science, and a combination of hardware and software.
On corporate governance lapses: Bad apples exist in every market. Unfortunately, in India, we are at a stage now where one bad apple can spoil the party. There’s certainly some conflict about how boards are run in small private companies because you have the biggest investors as board members. Most of these companies don’t have an independent director on the board. That’s a problem.
Read the full interview here.
Also read | ETtech State of Startups 2023: Founders resist valuation cuts as funding drought drags on
RBI grants payment aggregator licence to Tata Pay, DigiO
Tata Payments, the digital payments business of the Tata group, and Bengaluru-based identity verification startup DigiO have secured the payment aggregator (PA) licence from the RBI. Razorpay, Cashfree, and others were part of the first tranche of fintechs to secure the same.
Driving the news: Tata group has been betting big on its digital play. This licence will help the salt-to-software services conglomerate process payments for ecommerce transactions through its platform. Given the group currently houses multiple digital businesses, Tata Pay can process a significant portion of these transactions going forward.
Context: In 2022, Tata group launched its digital payments application on the Unified Payments Interface (UPI) platform with ICICI Bank. With the licence in place, it can now launch merchant payments. Meanwhile, Bengaluru-based identity verification startup DigiO, backed by investment platform Groww, intends to use the licence to solve for recurring payments.
Also read | ETtech Explainer: The headlong rush for a payment aggregator licence
Other Top Stories By Our Reporters
Rakesh Deshmukh steps down as CEO of PhonePe-owned Indus Appstore: Rakesh Deshmukh, cofounder of PhonePe-owned app-discovery platform Indus Appstore, has stepped down from his role as chief executive and left the company. Deshmukh, along with Indian Institute of Technology-Bombay alumni Akash Dongre and Sudhir Bangarambandi, founded the company in 2013.
KnowledgeHut chief Subramanyam Reddy quits Upgrad: Online higher education firm Upgrad on Tuesday said Subramanyam Reddy, the division head of its KnowledgeHut business, has quit the firm.
Global Picks We Are Reading
■ AI may not steal your job, but it could stop you getting hired (Wired)
■ China’s BYD closer to taking Tesla’s electric car top spot (BBC)
■ Big Tech braces for wave of antitrust rulings in 2024 (WSJ)