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Discovering stock markets’ mojo   

A lack of information about the majority of listed companies led a pair of entrepreneurs to develop a research tool to analyse millions of data points on previously unresearched companies. It is now set for global expansion.

Of the 75,000 companies listed on stock exchanges globally, about 40% are researched by most of the leading brokerage houses. There is little or no information regarding the remaining 60%. Spotting this as an opportunity, an Indian company is using technology to gather information on every stock, enabling retail investors to make investment decisions not just locally but globally. In 2016, MarketsMojo went live with its algorithm-based fundamental and technical research tool. The founders, Mohit Batra and Joyson Thomas, were veterans of the financial world and had previously cofounded Moneycontrol, a financial research and news portal in India that is now a part of diversified conglomerate Reliance Industries.

“The whole idea of starting MarketsMojo came up in around 2011-12,” says Batra. Studying stock investment patterns in India, Batra found equity penetration was extremely low. “It is still low at a mere 4-5% despite giving returns of over 18% compound annual growth rate and delivering long-term tax benefits.” Batra’s research revealed that there was very little information available about 85% of the 4,000 listed companies on Indian bourses; most brokerages were researching the same 200 companies.start up of the month

Batra formulated the idea of creating a technology platform that would analyse millions of data points of a company collected from various sources via a complex matrix of algorithms to produce a comprehensive research report. MarketsMojo is registered with the Indian capital markets regulator, the Securities and Exchange Board of India and built its entire platform inhouse.

The platform analyses seven parameters: returns, risk, liquidity, diversification, quality, valuation and current financial trends. The aim is to provide retail investors with as much information as possible about stock market investments and the benefits they can bring. As of now, more than 90% of Indians prefer to invest in real estate, gold or bank deposits.

Batra believes there are several reasons people avoid stock market investment in India. These include a lack of understanding of the companies issuing stocks and of equity investing principles. People are also unaware of the risk and returns associated with stock investing and many have been misguided by brokers or misled by hearsay. He believes technology can overcome these problems. The constantly learning algorithms of the MarketsMojo platform analyse all of a company’s financials and balance-sheet and any related factors, giving a detailed report on whether to buy, sell or hold on to a particular stock in a very simplified manner. Users can upload their existing portfolios onto the platform and can also invest new money in a portfolio and access the same information.

“Our USP is in our technology that provides unbiased research, indepth and personalised portfolio analysis,” says Batra, adding that the company has formulated a strong insider trading policy wherein the founders are not allowed to directly invest in stocks. At present, the company analyses more than 30 million data points daily that can affect an investor’s decisions. “When we started in 2016, we used to collect 15 million data points, so we have doubled our research capabilities in the past four years. We provide detailed coverage of all the 4,000 listed companies on Indian bourses at present,” Batra says, adding that the company is now creating self adjusting algorithms that can change in real-time by automatically catching recent information on any stock.

Batra added that these self-adjusting and self-learning algorithms would soon become a vital tool for the company, which is planning global expansion. “Technology has to be the enabler, but experience has to be human. We are always working on the next level of customisation we can provide to our clients,” he says. “We have launched customised videos that we send to clients via email and these messages have the highest open rates.” The company is also looking to expand its offerings by adding analysis and information on mutual funds and bonds. Most of MarketMojo’s revenues are generated by content integration with brokers and media companies; the end investor is not charged.

The company has three business models: B2B, B2B2C and B2C. In the B2B model, the company provides its research offerings and portfolio services to more than 12 retail brokerages, including Motilal Oswal Securities and Kotak Securities. This model contributes 70% of the company’s revenues and Batra anticipates revenues will triple in the next three years.

The B2B2C is the fastest-growing model for MarketsMojo and involves zero cost (the revenue is shared with brokers). At present it contributes 10% of revenues to the company. Via the B2B2C approach, MarketsMojo has reached more than 30% of Indian investors in the past three years.

“Financial services in India is a market of scale and concentration at the same time and that’s the real opportunity,” says Batra. “Concentration is at super high net worth individuals that are over serviced, but the real scale is in retail. For example, India has more than 6.5 billion bank accounts but investment accounts combined both for mutual funds and equities number just about 30-40 million. That’s a 95% untouched base that can be reached very effectively via smart investing technology solutions. Hence, we believe the next-gen scale is in the B2C segment. But scale will not come at the cost of profitability and that’s the real challenge for us.”

The company is also planning a global debut of its B2C product (which currently generates 20% of the company’s revenues) and recently hired a chief executive for global operations. “MarketMojo’s tech platform is global-ready with local data, reporting patterns and regulatory rules. We are looking at several markets such as Australia, Indonesia, Sri Lanka and Saudi Arabia,” Batra says, adding that the company is set to go live with Australia in four to five months. Additionally, the Saudi Arabian market has opened in the past two years, but investors aren’t aware of where and when to invest. Therefore the company is looking to expand into this market.

Mohit and Thomas bootstrapped the company with their savings and received a strategic investment from Haresh Chawla, managing partner India at India Value Fund Advisors. Batra says there are no plans to raise private equity at present and the company has already started to make money. “We plan to go public in the next three to five years and we expect to clock around INR5 billion in revenues by then,” he says. With no marketing spend, the company has grown from no registered users to two million during the past three years.

Article by:- 

Priyanka Pani
Regional Correspondent – Middle East and Asia,
IBS Intelligence

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