08.11 · Financial services ex-lending: insurance, AMCs, exchanges, depositories, brokers, wealth, fintech¶
Sector playbook. The non-lending financials are India's "financialisation" trade: household savings moving from deposits and gold into mutual funds (SIPs), insurance, equities and managed wealth. The businesses are capital-light, operating-leverage-rich and regulated in their fee rates — which means their profits and multiples swing with retail participation and with SEBI's and IRDAI's decisions. NSE's IPO (September 2026) adds the largest of them to the listed universe. Methods are in 07.2; this is the field guide.
Time: ~70 min · Prerequisites: 07.2 Insurers, AMCs, exchanges & brokers
1. Life insurance¶
| Item | Notes |
|---|---|
| Structure | LIC (~55–60% of new business premium — verify) plus private insurers led by SBI Life, HDFC Life, ICICI Prudential, Max Life (Axis Max), Bajaj Allianz (unlisted), Tata AIA (unlisted) |
| FY26 data points | VNB margins: SBI Life 27.5%, ICICI Pru 24.7%, Max 25.2%, HDFC Life 24.2%, LIC 21.2%; VNB growth ~10–12% at SBI Life/ICICI Pru, ~2% at HDFC Life (Business Standard, Jun-2026); the 2025 GST exemption on life/health premiums lifted volumes — verify details (Whalesbook) |
| KPIs | APE growth; VNB and margin; product mix (protection, non-par, par, ULIP, annuity); persistency (13th/61st month); embedded value and operating RoEV; solvency; channel mix (bancassurance share); expense ratio |
| Drivers | Household savings rate and equity-market sentiment (ULIPs); interest rates (non-par guarantees); regulation — IRDAI's surrender-value rules (2024), product approvals, bancassurance open-architecture debates, GST; tax changes (the 2023 cap on tax-free maturity of high-premium policies — verify) |
| Valuation | P/EV (2–4x range, verify current); appraisal value; reverse-solve the VNB growth the P/EV implies |
| Red flags | Persistency falling; VNB growth via aggressive non-par guarantees in a falling-rate environment; bancassurance dependence on one bank; EV assumption changes (discount rate, expenses) flattering EV |
2. General and health insurance¶
ICICI Lombard, New India Assurance (PSU), Star Health, Niva Bupa, Go Digit; PSU general insurers with weak solvency. KPIs: gross written premium growth by line (motor, health, crop, fire), combined ratio, loss ratios by line, reserving development, solvency, investment yield. Drivers: motor sales and third-party premium notifications, health claims inflation and hospital pricing, crop-scheme participation, IRDAI's expense-of-management limits, and distribution (PoSPs, digital). Valuation: P/E and P/B with float-adjusted RoE; combined-ratio scenarios.
3. Asset management¶
| Item | Notes |
|---|---|
| Structure | ~45 AMCs; top 5 (SBI, ICICI Pru, HDFC, Nippon, Kotak) ~55–60% of AUM — verify; listed: HDFC AMC (11.4% share of quarterly average AUM, ~65% equity mix; closing AUM ₹8.4 lakh Cr at Mar-26 — Multibagg), Nippon Life India AM (8.9% share), UTI AMC, Aditya Birla Sun Life AMC, Shriram AMC |
| KPIs | Total and equity AUM; market share; net flows (SIP book, lump-sum); yield on AUM (bps) by asset class; cost-to-income; operating profit / AUM; other income share; passive/ETF share |
| Drivers | Equity-market returns (MTM); SIP flows (₹25,000+ Cr/month industry — verify AMFI); SEBI TER regulation (slab caps; 2025–26 consultation on further changes — verify); distributor commission rules; competition from passive and from new entrants (Jio BlackRock, Zerodha Fund House); direct vs regular plan mix |
| Valuation | P/E; market cap / AUM (5–12% of equity AUM for leaders); DCF under TER scenarios |
| Red flags | Yield compression faster than AUM growth; equity share falling; flow share lost to passive; "other income" (treasury) driving profit growth |
Adjacent: RTAs (CAMS ~68% of MF AUM serviced, KFin ~32% — verify): AUM-linked fees, duopoly, AMC fee-pressure pass-through; valuation on P/E with AUM growth.
4. Exchanges, depositories, clearing¶
| Item | Notes |
|---|---|
| NSE | IPO September 2026 (₹22,562 Cr, 5.7x subscribed, listing ~24-Sep — Kotak Neo); dominant in cash (~90%+) and derivatives; revenue from transaction charges (equity, derivatives, currency), listing, data, co-location, clearing (NSE Clearing), index licensing (NSE Indices) |
| BSE | Gained share in index options via Sensex weekly expiries after SEBI's one-weekly-per-exchange rule; StAR MF platform; listing fees |
| MCX | Commodity derivatives (crude, natural gas, bullion, base metals); technology platform transition (2023); regulatory product approvals |
| CDSL / NSDL | Demat accounts (CDSL retail-heavy; NSDL institutional/value-heavy); annual issuer charges, transaction fees; NSDL listed in 2025 (verify) |
| KPIs | Traded volumes by segment (notional and premium turnover for options); transaction fee per unit; market share; number of active clients/demat accounts; clearing and margin float income; data/licensing revenue |
| Drivers | Retail participation (F&O measures of 2024–25 cut index-option volumes sharply — 07.2 §4.2); SEBI fee and product regulation; new products (weekly expiries, commodity options, electricity derivatives); interoperability and competition; technology outages (SEBI penalties) |
| Valuation | DCF with volume and regulatory scenarios; global exchange multiples; separate volume revenue from data/listing/clearing revenue |
| Red flags | Concentration of profit in one product class the regulator is scrutinising; governance/co-location legacy issues (NSE's history); technology incidents |
5. Brokers, wealth managers, fintech¶
| Segment | Companies (verify) | KPIs | Drivers |
|---|---|---|---|
| Discount brokers | Zerodha (unlisted), Groww (IPO 2025 — verify), Angel One, Upstox (unlisted), 5paisa | Active clients (NSE active-client share), orders/day, revenue per client, float income, F&O share of revenue | SEBI F&O curbs (2024–25), "true-to-label" charges (2024), client-fund rules (ASBA-like), rates (float) |
| Full-service brokers / IB | ICICI Securities (delisted into ICICI Bank — verify), Motilal Oswal, IIFL Capital, JM Financial, Nuvama | Broking, distribution, IB/ECM fees, lending | Capital-market cycle, IPO pipeline |
| Wealth management | 360 ONE, Nuvama, Anand Rathi Wealth, Prudent | AUM/ARR (annual recurring revenue assets), net flows, yield, RM productivity | HNI wealth creation (IPOs, ESOP liquidity), shift to fee-based advisory |
| Fintech / payments | Paytm, PB Fintech (08.10), Zaggle, Infibeam; unlisted PhonePe (IPO expected — verify), Razorpay, Pine Labs | GMV, take rate, device installs, lending distribution | UPI economics (zero MDR; incentive schemes), RBI licensing (PA/PG, payments banks), credit-on-UPI |
Valuation: P/E with a cyclical haircut for brokers (float income separately, rate-sensitive); ARR-based multiples for wealth managers (market cap / ARR AUM, or P/E vs ARR growth); platform methods for fintech.
6. Accounting quirks¶
Insurers: statutory vs EV accounting; the pending Ind AS 117 transition (verify IRDAI's timeline); shareholder vs policyholder accounts. AMCs: revenue net of distributor commissions (gross vs net presentation changed under SEBI rules); treasury MTM. Exchanges: core SGF contributions; clearing-corporation consolidation; regulatory fee pass-throughs; settlement guarantee fund. Brokers: client funds not on balance sheet post-2024 rules; interest income on margin funding; ESOPs at new-age players.
7. The 10-question sector checklist¶
- What is the fee rate (TER, take rate, transaction charge, VNB margin), who sets it, and what is the regulator consulting on now?
- Volume driver (AUM, premiums, traded volumes, active clients) — cyclical position vs 5-year history?
- Mix: equity vs debt AUM; protection vs savings; options vs cash; F&O share of broker revenue?
- Operating leverage: cost base fixed or variable; what happens at −30% volumes?
- Other/treasury income share of profit?
- Distribution dependence (bank parent, one platform)?
- Capital and solvency (insurers) or clearing/settlement risk (exchanges)?
- Regulatory calendar: SEBI/IRDAI/RBI consultation papers and circulars pending?
- Governance history: exchange co-location, mis-selling penalties, promoter changes?
- What volume growth and fee rate does the multiple imply, and can the regulator change it?
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