HDFC Securities is a subsidiary of HDFC Bank and operates the group’s broking and investment distribution business.

Broking Business:The company operates two brokerage platforms:

• HDFC Sky: Discount/digital broking platform
• HDFC InvestRight: Traditional/full-service broking platform

As of now, HDFC Securities has a total customer base of around 7.8 million, including approximately 1.5 million active clients.

Distribution Business:HDFC Securities has a diversified distribution business through which it distributes mutual funds, insurance, ETFs, PMS, AIFs and NPS. This provides the company with multiple revenue streams, combining transaction-based brokerage income with recurring income from investment-product distribution.

Revenue Mix — FY26

HDFC Securities has a diversified revenue profile, with broking and interest income each contributing 48% of revenue, while distribution income contributes the remaining 4%.

• Broking Business: 48%
• Interest Income: 48%
• Distribution Business: 4%

Operating Performance

Client Base: Total customer base increased from 4.4 million in FY23 to 7.8 million in FY26.

Overall Active Clients & Market Share: The active client base increased from 1.19 million in FY23 to 1.52 million in FY26. HDFC Securities had a market share of 2.94% in July 2026, with around 1.35 million active clients. The company ranks among the top 8 players in the industry in terms of active clients.

Average Daily Volume: Average daily volume increased significantly from 1.3 lakh crore in FY24 to 3 lakh crore in FY26.

Revenue per Employee: Revenue per employee increased from 66.68 lakh in FY23 to 91 lakh in FY26, indicating an improvement in employee productivity.

Credit Rating: HDFC Securities has the highest credit rating of AAA from ICRA, reflecting its strong financial profile and creditworthiness.

MTF Book Size: HDFC Securities' MTF book size has increased significantly over the years, with the company generating a substantial portion of its interest income through Margin Trading Facility (MTF), where it provides funding to clients for trading. The MTF book increased from 3,232 crore in FY23 to 7,137 crore in FY26. Interest income contributes approximately 48% of the company's total revenue.

Industry Overview

The Indian brokerage industry was valued at ₹69,800 Cr in FY26 and is expected to reach approximately ₹90,000 Cr by 2030, implying a CAGR of around 6.6%. The total industry network stands at around ₹98,000 Cr, with Zerodha leading at ₹16,098 Cr, followed by Kotak Securities at ₹9,428 Cr, ICICI Securities at ₹5,255 Cr, Angel One at ₹4,962 Cr, Motilal Oswal at ₹4,830 Cr and HDFC Securities at ₹2,732 Cr. The brokerage industry continues to benefit from rising retail participation, increasing demat accounts and the shift toward digital investing.

The Wealth & Asset Management industry currently stands at around ₹60,000 Cr and is projected to reach approximately ₹1.5 trillion by 2030. At the same time, ARPU has increased from ₹15,900 to ₹20,000, reflecting higher customer monetisation and growing adoption of wealth and investment products. The expansion of financialisation, rising retail investments and increasing demand for advisory and wealth-management services provide a significant long-term opportunity for players such as HDFC Securities.

Cash Equity Market Turnover

The NSE cash equity turnover stood at ₹260.63 lakh crore in FY26, increasing by approximately 95.9% from ₹133.05 lakh crore in FY23. Similarly, BSE cash equity turnover increased by approximately 94.1%, rising from ₹10.10 lakh crore in FY23 to ₹19.60 lakh crore in FY26. This indicates that the cash equity market has almost doubled in turnover over the FY23–FY26 period.

However, NSE cash equity turnover moderated by approximately 7.3%, declining from ₹281.28 lakh crore in FY25 to ₹260.63 lakh crore in FY26. The decline in trading activity can be attributed partly to the increase in Securities Transaction Tax (STT) and the increase in the short-term capital gains (STCG) tax rate, which raised the cost of short-term trading and reduced the attractiveness of frequent trading for market participants. Along with other regulatory measures in the derivatives segment, these changes contributed to a moderation in overall market activity.

HDFC has top 5 in the cash equity segment in term of the active client in the Cash Equity Market .

Equity Derivatives Segment

• Equity derivatives turnover declined in FY26, primarily due to various regulatory measures introduced by SEBI aimed at reducing excessive speculative activity in the options market.
• Key regulatory changes included:
• Increase in Securities Transaction Tax (STT) on options.
• Increase in the lot size for index derivatives, which raised the capital requirement for traders.
• Introduction of a single expiry day for each exchange, reducing the number of weekly expiries available for trading.

These regulatory measures resulted in a significant decline in options activity:

• Options contract volumes declined by 51.5%, from 13,321 crore in FY25 to 6,460 crore in FY26.
• Exercise settlement declined by 40.5%, from ₹45,424 crore to ₹27,013 crore.
• Total options settlement declined from approximately ₹2.43 lakh crore in FY25 to ₹1.84 lakh crore in FY26.

In contrast, futures settlement increased by 4.0%, rising from ₹5,25,162 crore in FY25 to ₹5,45,940 crore in FY26.Overall, total equity F&O settlement declined by 5.0%, from ₹7,68,225 crore in FY25 to ₹7,29,617 crore in FY26, indicating that the sharp contraction in options activity more than offset the growth in futures settlement.

ACTIVE DEMAT ACCOUNTS:

In July 2026, total active demat accounts stood at 4.54 crore, declining by around 8.54 lakh accounts MoM from the previous month. The active client base was also down 3.8% YoY from 4.72 crore in July 2025 and remained 9.6% below its all-time high of 5.02 crore, indicating a moderation in retail investor participation.

HDFC Securities currently holds approximately a 2.94% market share in active demat accounts. However, its market share has seen a decline compared to the previous year. Specifically, the share dropped from 3.3% in June of last year to 2.94%, reflecting a loss of roughly 2.39 lakh active users over that period.

Over recent years, discount brokers have consistently gained market share from traditional brokers. Consequently, the combined share of bank and non-bank brokers declined significantly, dropping from 51% in FY22 to 31% in FY26.

MTF Market:

The Margin Trading Facility (MTF) market has grown to ₹1.51 lakh crore, up 29% YoY from ₹1.17 lakh crore in FY25. The rapid growth in MTF provides brokers with a significant opportunity to increase interest income and customer monetisation.

HDFC Bank has the largest MTF exposure at ₹12,800 crore, accounting for nearly 8.5% of the ₹1.51 lakh crore MTF market. Its MTF book is 5.48× its network, highlighting the significant scale of leverage-driven trading activity.

Financials

HDFC SECURITIES SEGMENT REVENUE :

They get the Revenue from the 3 different segment

Interest Income : They get Interest from the customer from the MTF where customer uses the Margin for trading and they pay the Interest to the HDFC .

Interest Income: Interest income has remained a key contributor to HDFC Securities’ revenue, with income from loans reaching ₹912 Cr in FY26. Deposit-related interest income also increased to ₹427 Cr, while interest on G-Secs surged sharply to ₹1,128 Cr from ₹53 Cr in FY25. Overall, interest income has become a key contributor to HDFC Securities’ top line, highlighting the growing importance of lending and treasury income.

BORKERAGE INCOME :

HDFC Securities’ brokerage income declined from ₹1,259 Cr in FY25 to ₹1,012 Cr in FY26, a 19.6% YoY decline. This reflects pressure on the core brokerage business amid lower active trading activity and regulatory changes impacting trading behaviour. However, fee income increased to ₹486 Cr from ₹462 Cr, providing some offset. Overall, total operating income declined from ₹1,744 Cr to ₹1,515 Cr.

DISTRIBUTION INCOME:

Insurance distribution income has remained largely flat, with total income at ₹132 Cr in FY26 vs ₹142 Cr in FY25 and ₹124 Cr in FY24. Life insurance contributes ~95% of total insurance income at ₹126 Cr, while general and health insurance remain marginal. Overall, the segment has seen limited growth and remains a relatively small contributor to HDFC Securities’ top line.

QUARTERLY PERFORMANCE :

Q1 FY26 Performance

HDFC Securities reported a strong performance in Q1 FY26, with revenue growth primarily driven by higher interest income, supported by income from its Margin Trading Facility (MTF) book and investments in bonds. Interest income increased by approximately 48% YoY and 5.7% QoQ, indicating continued growth in the financing business.

Fee and commission income also remained strong, increasing by around 23.1% YoY and 3.6% QoQ, supported by healthy trading and broking activity. Overall, the combination of higher interest income and steady growth in fee-based revenue resulted in a strong Q1 FY26 performance for HDFC Securities.

FINANCIAL :

HDFC Securities continues to maintain strong profitability, although margins have moderated. The EBITDA margin stood at 68.58% in FY26, down from 72.03% in FY25, while the PAT margin declined from 31% to 29%. The margin compression indicates some pressure on operating profitability despite the company's strong revenue growth.

The key concern remains high leverage. HDFC Securities' debt-to-equity ratio stood at 4.21x, significantly higher than the industry average of 0.27x. This elevated leverage is primarily linked to the rapid expansion of its Margin Trading Facility (MTF) book, which increased substantially from approximately ₹3,232 crore in FY23 to ₹12,800 crore as of June FY26. The company's debt-to-net-worth ratio of 5.48x further highlights the leveraged nature of its balance sheet. While the expansion of the MTF book supports higher interest income and revenue growth, it also increases the company's financial risk and sensitivity to market conditions.

On the returns front, HDFC Securities generated a healthy ROE of approximately 25%, significantly above the industry average of around 12%. This indicates that the company is generating strong earnings relative to its equity base, although the high leverage should be considered when evaluating this return profile.

From a valuation perspective, HDFC Securities is trading at around ₹7,990 per share in the unlisted market, implying a P/E multiple of approximately 15x. This is considerably lower than Groww's P/E of around 45x and below the broader industry average of approximately 19.69x, suggesting that HDFC Securities is trading at a relative valuation discount.

On a price-to-book (P/B) basis, HDFC Securities trades at approximately 4.5x, compared with the industry average of 3.79x, indicating a modest premium to the industry on book value. Meanwhile, its market-cap-to-sales multiple is around 3.5x, broadly in line with the industry benchmark of approximately 3.98x.

Overall, HDFC Securities has a strong profitability profile, healthy ROE and attractive P/E valuation. However, its high leverage and rapidly expanding MTF book remain key risks that investors need to monitor. At an estimated unlisted-market market capitalization of ₹14,281 crore, the stock appears reasonably valued on earnings, particularly when compared with high-growth peers, although the premium P/B valuation and elevated leverage warrant caution.