Edelweiss Capital Opening retail broking arm in next 3 months

June 4, 2009 · Author: · Category: conference call 
  • Edelweiss Capital For the fourth quarter ended Mar’09, reported 55% decline in consolidated Income from operations to Rs 180.08 crore. Income from all sources reported decline on y-o-y basis.
  • Gross profit declined by 51% to Rs 73.68 crore despite 95% increase in other income and 57% fall in total expenses. 74% rise in deprecation further brings Net Profit down by 50% to Rs 40.93 crore.
  • The PBT margin for the full year FY09 declined to 36.5% compared to 41% in FY08. This is largely due to two reasons – one, scaling down of market size and other due to STT of Rs 72 crore on treasury (Rs 62 crore during FY08).
  • The company currently has 4 integrated offices in leading metros and 18 branch offices across the country of which 3 branches are run on franchisees.
  • The Board of the Company has recommended a dividend of Rs 3 per share (face value Rs 5 per share)
  • Networth without minority interest at Rs 2115 crore for FY09. Networth including minority interest at Rs 2500 crore for FY09. Book value per share at Rs 282.3 as on FY09.
  • The Brokerage Services business has performed in line with the markets during the year. The company’s Research continues to cover over 125 stocks across 16 sectors accounting for about 65% of the total market capitalization.
  • Broking commission value fell more than 50% owing to shrinkage in volumes in market. Broking business roughly constitutes 55-60% of the Fee income of Rs 244.12 crore. While investment banking business income forms the remaining 45-40%.
  • The average daily trading volumes for FY09 is over Rs 3900 crore. Market share reminded at 6.4% of total average daily volumes for FY09.
  • The company was able to scale down its cost for the year. It brought down its staff head count from 1800 in FY08 to 1400 in FY09 due to this the employee cost came down by 19% to Rs 165.94 crore.
  • It has also brought down the risk collateral cover to 2.8x in FY09.
  • The Loans business has an asset base of around Rs 550 crore. It comprises of loans granted against capital market securities and is adequately collateralized.
  • The company has consciously brought down the book size given the current environment and focused more on collateral management. The interest income from loans business continues to be a distinct contributor to revenue streams.
  • Average yield on loan book is around 16.5-17% for FY09.
  • Balance sheet constitutes: Equity – Rs 2500 crore, Borrowing- Rs 700 crore (Rs 1800 crore in FY08), Bank FD’s – Rs 1300 crore.
  • The company’s main focus for FY10 will be maintaining liquidity and grow its balance sheet.
  • The Investment Banking activity in India has seen a marked slowdown in the year, both in the primary equity capital issuances and other advisory services. The company has closed 9 investment banking transactions in FY09.
  • Notable transactions amongst these were the acquisition of People Support, Inc. by Aegis BPO Services Limited for USD 250 million and private equity placement for SKS Micro Finance for USD 75 million.
  • The Debt Syndication Desk, which has been operational for about a year and a half so far, has gained a strong foothold and visibility in the market during the year.
  • The Alternative Asset Management activity in India has seen significant outflow from foreign investors during the year. It delivers highly valued investment advice, both direct and indirect to few select funds. During the year, this business launched a debt oriented fund. The AUMs/AUAs stood over USD 350 million as on March 31, 2009.
  • The Asset Management Company manages two Debt Funds, one Interval Fund and one Equity Fund as on 31st March 2009. It has recently launched an Equity Diversified Growth Equity (E.D.G.E.) Fund. The focus of this business continues to be on developing the product portfolio and investment management capabilities.
  • The company is setting up new retail broking business in 3 months time for which it has recruited 140 people. The retail branches will be both in franchise and own branches.
  • It has also started a new NBFC business which will focus more on collateralized liquid loans. The total market size of this segment is 25000-30000 crore and the company is targeting to build a business of 5000-7000 crore business in a years time.
  • Going forward, the company forecasts its Agency business, Investment banking and new retail broking business to contribute to its revenue stream while it maintains caution on finance business.

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