F&O slump hits profits at top Indian brokers—diversification now key

As the industry consolidates, brokers are spending on customer acquisition too, executives say

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in FY26 so far. To be sure, broking firms have been expanding outside their core business for some time. But the pace of diversification has increased after Sebi's curbs on retail F&O trading.

According to CareEdge Ratings, the industry's stock broking revenue at ₹43,900 crore in FY25. While brokerages do not break out F&O income separately from cash equities, the impact on broking income has been visible.

For instance, broking as a percentage of total revenue at Angel One dropped from 65% in Q3FY25 to 61% in Q1FY26. At 5paisa, it fell from 52% to 46%. Motilal Oswal Financial Services and Geojit Financial Services, which have more diversified revenue models, saw less change.

"Their sources are diversified. After the curb by the regulator on F&O, now they may shift focus from one segment to another," said Siddarth Bhamre, head of research (institutional equities) at ACMIIL.

With volatility in F&O earnings, brokerages are pushing harder into fee-based and interest-income businesses, like wealth and asset management, mutual fund and insurance distribution, and lending against shares. "Brokers now distribute mutual funds (MFs), insurance, and some have their own mutual funds also," said Bhamre.

After a drop in volumes, brokers may look at more ways to monetize and build the customer who is coming for broking, said Nirav Shah, managing director at Equirus Capital. "The focus will not just be on broking but a 360-degree client servicing, as the same client will open a mutual fund account or take a loan against shares, MF or others."