Custodians are specialized service provider who are responsible for safeguarding investor’s (institutional and individual) financial assets and minimising the risk of theft or loss. They have progressed from their traditional role of providing safekeeping service, to offer a gamut of banking and information services.
| Core Services | Auxiliary and Administrative Services |
|---|---|
| ▪ Securities safekeeping | ▪ Fund accounting |
| ▪ Securities transaction processing | ▪ Foreign exchange services |
| ▪ Settlement | ▪ Securities lending |
| ▪ Asset servicing | ▪ Escrow services |
| ▪ Professional clearing | ▪ Transfer agency services ▪ Trustee services |
| ▪ Across asset classes, including equity, commodities, fixed income, and private equity | ▪ Collateral management
▪ Compliance monitoring |
There are 17 custodians in the country. Of these, 5 are Indian bank sponsored, 7 are foreign bank sponsored and 4 are brokerage sponsored. ORBIS is the only independent custodian in India.
| Metric | Foreign Full-Service Banks | Indian Full-Service Banks | Non-Bank Custodians |
|---|---|---|---|
| # Entities | 7 | 5 | 5 |
| Entity Names |
▪ BNP Paribas ▪ Citi Bank ▪ DBS Bank India Limited ▪ Deutsche Bank ▪ HSBC ▪ JP Morgan Chase Bank ▪ Standard Chartered Bank |
▪ Axis Bank ▪ HDFC Bank ▪ ICICI Bank ▪ Kotak Mahindra Bank ▪ Yes Bank |
▪ IL&FS Securities Services ▪ Nuvama Custodial Services ▪ Orbis Financial Corp ▪ Stock Holding Corp. ▪ SBI-SG Global Securities |
| Market share | 50–55% | 5–10% | 40–45% |
The Indian custody services market has seen significant growth over the past two decades. However, themarket is still less than 2 percent of the total global custody market. In comparison, India’s share in global GDP is about 3.5 percent, thus implying that the country’s AUC market has a significant room to grow. As the Indian capital market matures and attracts investments, its share in the global custody market is expected to increase.
About the Company: Company was formed in 2005 and the Custodian licence was awarded in Jun’17. It was started by Atul Gupta, with immense experience in financial services and is managed by a professional team.
ORBIS has about 12.2 Cr. Shares outstanding with about 28.5% with founder promoter, 16.6% with employees and ESOPs, 31% with institutional investors and balance with others
| Head | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 5.1 | 8.1 | 7.6 | 12.1 | 15.9 | 33.7 | 66.6 | 154.2 | 296.7 | 424.2 |
| YOY Growth | 59% | -6% | 59% | 32% | 112% | 97% | 132% | 92% | 43% | |
| Expenses | 5.5 | 8.0 | 7.6 | 9.6 | 11.5 | 20.1 | 56.0 | 94.2 | 133.6 | 175.7 |
| YOY Growth | 44% | -4% | 26% | 20% | 74% | 178% | 68% | 42% | 32% | |
| Operating Profit | -0.4 | 0.1 | 0.0 | 2.5 | 4.4 | 13.6 | 10.6 | 60.0 | 163.1 | 248.2 |
| Other Income | 1.3 | 2.2 | 1.1 | 5.5 | 6.5 | 10.2 | 20.0 | 36.8 | 3.1 | 7.2 |
| Depreciation | 1.4 | 0.4 | 0.5 | 0.5 | 0.6 | 0.9 | 1.1 | 1.3 | 2.0 | 3.6 |
| Interest / Finance Cost | 0.0 | 0.0 | 0.0 | 0.1 | 1.3 | 6.5 | 9.9 | 30.3 | 42.3 | 64.8 |
| Profit before tax | -0.5 | 1.9 | 0.6 | 7.3 | 9.0 | 16.3 | 19.5 | 65.2 | 121.9 | 187.2 |
| Tax | 0.0 | 0.0 | 0.0 | 1.8 | 4.8 | 3.6 | 15.4 | 17.4 | 32.3 | 45.9 |
| Net profit | -0.5 | 1.9 | 0.6 | 7.3 | 7.2 | 11.6 | 15.9 | 47.8 | 89.6 | 141.3 |
| YOY Growth | L to P | -68% | 1090% | -2% | 60% | 38% | 200% | 87% | 58% | |
| Operating profit Margin (%) | 1.7 | -0.3 | 20.3 | 27.4 | 40.2 | 15.9 | 38.9 | 55.0 | 42.4 | |
| PBT Margin (%) | 23.8 | 8.1 | 60.6 | 56.8 | 48.5 | 29.3 | 42.3 | 44.1 | 44.1 | |
| PAT Margin (%) | 23.8 | 8.1 | 60.6 | 45.3 | 34.3 | 23.9 | 31.0 | 30.2 | 33.3 |
| Head | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|---|---|---|---|---|
| Equity Share Capital | 65.5 | 65.5 | 65.5 | 65.5 | 65.5 | 65.5 | 87.6 | 94.3 | 113.6 | 121.7 |
| Reserves | -15.1 | -13.1 | -12.5 | -5.2 | 2.0 | 13.9 | 67.4 | 128.7 | 315.4 | 566.5 |
| Borrowings | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Other Liabilities | 45.0 | 44.1 | 57.4 | 152.8 | 262.7 | 413.7 | 2,146.4 | 3,700.8 | 4,611.2 | 4,296.5 |
| Total | 95.5 | 96.5 | 110.4 | 213.2 | 330.2 | 493.1 | 2,301.4 | 3,923.8 | 5,040.2 | 4,984.7 |
| Net Block | 12.2 | 12.0 | 11.7 | 11.8 | 12.5 | 14.0 | 13.6 | 14.2 | 25.9 | 26.8 |
| Investments | 14.1 | 20.0 | 11.0 | 79.5 | 171.4 | 237.2 | 823.9 | 89.3 | 159.0 | 94.5 |
| Other Assets | 69.1 | 64.4 | 87.6 | 121.8 | 146.3 | 241.9 | 1,463.9 | 3,820.0 | 4,855.1 | 4,863.4 |
| Total | 95.5 | 96.5 | 110.4 | 213.2 | 330.2 | 493.1 | 2,301.4 | 3,923.8 | 5,040.2 | 4,984.7 |
|
Since last 8 years: ▪ Revenues growth at 65% CAGR ▪ Operating profit grew at 155% CAGR ▪ Net Profit grew at 71.6% CAGR |
Positives for Business: ▪ High entry barriers – No new licences from SEBI ▪ For domestic banks – this is a non-core business ▪ For foreign banks – this is a tiny fraction of global revenues. |
|
▪ ORBIS enjoys lion’s share of non-bank custodian business – AUM at 1.231 Cr. ▪ Financialization of savings is expected to grow rapidly, hence its business will also grow. ▪ We expect revenues to grow at similar pace for a long time. |
▪ Only player offering ALL services under one umbrella: DDP, DP, PCM, Trustee, Custodian, Fund Accounting, Investor Servicing, Registrar and Transfer Agent ▪ Growing business with a good management available at reasonable valuations. |
