Edelweiss Capital Focused on institutional business Has fully capitalised on the favourable market conditions to grow at a fast pace Promoted by Rashesh Shah, Venkatchalam Ramaswamy and their wives, Edelweiss Capital (ECL) commenced its operations in 1996. Headquartered in Mumbai, the company has 43 branch offices in 19 Indian cities and employs around 843 full-time employees including 40 research professionals. It operates through its 13 subsidiaries under two streams:: agency business and capital business. The agency business includes investment banking, institutional equities, private client broking, asset management and investment advisory services, wealth management and insurance broking. The capital business comprises wholesale financing services and internal treasury operations. ECL’s institutional clients stood at 150 institutional investors end September 2007. This is much less compared to its peer Motilal Oswal Financial Services, with 251 institutional clients end March 2007. Nevertheless, the base is high compared to Religare Enterprises, catering to 79 institutional investors end September 2007. ECL is coming out with public issue to fuel its future growth. Strengths The consolidated income from operation and net profit after minority interest have grown at a CAGR of 130% to Rs 368.96 crore and 142% to Rs 109.01 crore between the year ending March 2004 (FY 2004) and FY 2007. Well established brand name offering diversified financial services under one roof. An integrated service platform allows for leveraging relationships across lines of businesses, thereby increasing the ability to cross-sell services. Weaknesses Weak in the retail business. Most of the revenue is directly/indirectly dependent on the performance of the equity markets. Valuation ECL’s consolidated income from operations surged 135% to Rs 284.58 crore and net profit after minority interest 169% to Rs 109.01 crore in FY 2007. On consolidated net profit after minority interest on post-issue equity of Rs 37.46 crore, EPS works out to Rs 14.6. At the offer price band of Rs 725- Rs 825, P/E works to 49.7 (on lower band) to 56.5 (on upper price band) times. P/E of listed players Motilal Oswal Financial Services is 51.0 times, India Bulls Financial Services 37.2 times, Emkay Shares 47.5 times, India Infoline Financial Services 71.9 times, IL&FS Investsmart 30.4 times, and Geojit Financial Services 34 times.
| Edelweiss Capital: Issue Details | | No. of shares on offer | 8386147 | | Face value (Rs) | 5 | | Price band (Rs) | 725-825 | | Post-issue equity (Rs crore) | 37.46 | | Post-issue promoter stake (%) | 38 | | Issue open date | 15-11-2007 | | Issue close date | 20-11-2007 | | Listing | NSE & BSE | | Rating | 48/100 | | Edelweiss Capital: Consolidated Results | | Income from Operations | 284.58 | 368.96 | 156.98 | 76.23 | 30.29 | | Other Income | 0.28 | 2.27 | 1.01 | 0.82 | 0.31 | | Total Income | 284.86 | 371.23 | 157.99 | 77.05 | 30.60 | | Financial Expenses | 35.99 | 18.69 | 5.38 | 3.44 | 1.87 | | Other Expenses | 119.09 | 175.01 | 81.11 | 37.89 | 16.26 | | Gross Profit | 129.78 | 177.53 | 71.50 | 35.72 | 12.47 | | Depreciation | 1.89 | 3.76 | 2.05 | 0.97 | 0.52 | | Profit Before Tax | 127.89 | 173.77 | 69.45 | 34.75 | 11.95 | | Taxation | 43.75 | 64.59 | 23 | 11.33 | 3.84 | | Net Profit Before EO | 84.14 | 109.18 | 46.45 | 23.42 | 8.11 | | EO (Net of Tax) | 0.00 | 0.00 | 2.07 | 0.00 | 0.00 | | PAT after EO and Before Minority Interest | 84.14 | 109.18 | 44.38 | 23.42 | 8.11 | | Share of Minority Interest | 3.21 | 0.17 | 3.79 | 0.94 | 0.45 | | Adjustment on Account of Change in Minority Interest | 0 | 0.00 | 0.04 | 0.00 | 0.00 | | Net Profit | 80.93 | 109.01 | 40.55 | 22.48 | 7.66 | | EPS*(Rs) | 25.9 | 14.6 | 5.4 | 3.0 | 1.0 | * Annualised on post-issue equity of Rs 37.46 crore. Face Value: Rs 5.
Var. (%) exceeding 999 has been truncated to 999
LP: Loss to Profit. PL: Profit to Loss
EO: Extraordinary items
Figures in Rs crore.
Source: Capitaline Corporate Database | | Peer group comparison | | Latest equity share capital (Rs in crore) | 44.55 | 53.36 | 69.84 | 20.9 | 24.27 | 14.2 | 37.46 | | FV (Rs) | 2 | 10 | 10 | 1 | 10 | 5 | 5 | | Consolidated PAT (Rs in crore) as on March 2007 | 443.4 | 75.61 | 40.7 | 25.26 | 10.32 | 71.17 | 109.01 | | Price (as on 9 Nov 2007) | 741.10 | 1019.30 | 177.1 | 41.05 | 201.95 | 1278.55 | 725-825 | | EPS (Rs) as on March 2007 | 19.9 | 14.2 | 5.8 | 1.2 | 4.3 | 25.1 | 14.6 | | P/E | 37.2 | 71.9 | 30.4 | 34.0 | 47.5 | 51.0 | 49.7-56.5 | | Market capital (Rs in crore) | 16508.00 | 5438.98 | 1236.87 | 857.95 | 490.13 | 3631.08 | 27158.50-30904.50 | | Source: Capitaline database. | |