MUMBAI: Brokerage executives and the thousands of bright young people that run Mumbai’s buzzing dealing rooms and research, sales and product desks will likely get record incentive payouts and bonuses this year, matching the handsome rewards for both D-Street veterans and recent converts to the equity culture through a period of unprecedented gains for India’s entire risk-asset spectrum.
Bonuses at some of the leading companies could range from three to seven months of additional pay, said top executives. Average increments could be in the range of 10-15%, with high performers, especially in technology and product development roles, likely taking home 30-40% more, they said.
“Payouts across the industry are expected to be attractive this year,” said Niren Srivastava, group CHRO, Motilal Oswal Financial Services. “We have been on a growth path and that has continued in FY24, too.”
Officials said the focus is on ring-fencing manpower across levels – especially high-potential talent. As the Nifty 50 stays north of 22,000 levels despite recent corrections, attrition in the industry is at an elevated level of 40-60%.
To be sure, FY24 has proven to be exceptional for the broking industry, which witnessed an average growth of 30% in revenues and about 25% expansion in net profits, said Dhiraj Relli, MD and CEO, HDFC Securities.
“We anticipate a 10-12% increment in the industry, with an expected bonus range of 25-30%,” Relli said.
Since April 1, India has witnessed the opening of 58.5 million demat accounts, the highest recorded in any financial year. Additionally, in the current fiscal year, 70 companies have collectively raised `60,000 crore from public issues, compared with 37 companies garnering `52,000 crore in the entire preceding year.
“The market is hot, and we have added one lakh active accounts every month over the last three months. Our focus is on retention of top talent who would be adequately rewarded this fiscal,” said Vikrant Birajdar, CHRO at discount broking platform 5paisa.com.
Pressure to Retain Talent
“We have also rolled out ESOP plans across levels. Higher bonuses, retention bonuses, and performance- or tenure-linked stock options will also be paid out to critical talent and key people in the organisation.”
Most brokerages are in the process of finalising their increments and bonuses for the fiscal and will announce the new packages and bonus payouts starting mid-April.
While larger companies with a bigger employee base are likely to pay average increments of 11-12%, some of the smaller entities will pay about 14-15% to retain critical talent.
“As per our survey for broking companies, we see 60% of them are optimistic of getting salary hikes exceeding 10% and 30% are confident of seeing hikes in high single digits,” said Aditya Narayan Mishra, CEO, Ciel HR Services.
“As retail investors have been participating more in the capital markets and the IPO markets are reviving, we see a gradual rise in hiring in this industry, led by the new-age fintech companies like Groww, 5Paisa and Zerodha. This phenomenon puts pressure on the industry players to retain their talent by giving attractive salary hikes.”
DIGITAL TRANSFORMATION
Top talent in digital transformation roles at the brokerages are expected to get a huge premium.
“We have a big focus on digital transformation and hence talent related to data and technology will be among the ones getting a premium,” Birajdar added.
Product managers and high-end AI and digital professionals will be among the biggest earners this year.
Promotions, meanwhile, are also likely to serve as a key retention tool for critical talent.
“About 15% of the organisation is likely to be considered for promotion this year — with focus on strategy, revenue and digital functions,” said Birajdar. “Our focus is more on giving opportunities within the firm. We are also sending high potential candidates for leadership development programmes to top management institutes like the IIMs.”
The company will announce its payouts for the fiscal in May.
Broking houses have seen increased earnings in the current fiscal year due to higher trade volumes and gains in proprietary books. For instance, ICICI Securities reported a 39% growth in revenue for the nine months ending December 2023 compared with the same period the previous year. The company also achieved a 36% growth in profit during this period.
Broking firms have also gained substantial chunk from products such as margin financing, currently at a record high. The sale of wealth products such as portfolio management services (PMS) and alternative investment funds (AIFs) have also improved the fee-based incomes of broking companies.
