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Broking
We expect a considerable QoQ dip in bottomline growth of brokerage
companies in Q1FY12. Total revenue is seen down 8% QoQ, dragged by
a 14% QoQ fall in total market volumes, dismal IB fees and slowing
interest income.
…rise of options segment pressurises yields
The contribution of the options segment is rising rapidly. It now
stands at 70% (50% in Q1FY11, 64% in Q4FY11) of total market
turnover and 78% (34% in Q1FY11, 71% in Q4FY11) of total
derivatives turnover.
Falling share of cash turnover (10% of total market turnover) and
rising share of low yielding options segment is pressurising broking
yields. This along with falling market share is curtailing growth of
brokerage income for organised players.
Finance income slowing down…
Interest income, which drove topline growth for major players from
FY08, is expected to moderate due to pausing loan growth. Hence,
the delta for revenue growth is missing for major players.
We, therefore expect 8% QoQ decline in total revenues of the Idirect
broking universe. EBIDTA margins will be under pressure as
well on account of high operating expense. Bottomline is seen down
20% QoQ (for the second quarter in a row), 36% YoY.
The sector is aligning towards cost pressures by downsizing
employee strength. Under such a scenario, we expect consolidation
in the year ahead. Players with a strong balance sheet should
manage to withstand the slowdown. Though the stocks are available
at compelling valuations, we advise caution as positive trigger are
not visible in the near term.
Company specific view
Edelweiss Capital A mild fall in market share along with a drift in blended yields will cloud topline
growth. Higher operating expense will weigh on bottomline growth. PAT is,
therefore, seen down 24% QoQ, 46% YoY
India Infoline The exponential growth in the financing book over the past eight quarters is
expected to haunt impacting financing income. Brokerage revenues will dip QoQ
due to falling yields. PAT is seen down 21% QoQ
Motilal Oswal Low cash volumes will impact MOSL. IB and AMC fees is seen sluggish QoQ
while the EBIDTA margin is expected at 27% leading to PAT declining 14% QoQ
Source: ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Broking
We expect a considerable QoQ dip in bottomline growth of brokerage
companies in Q1FY12. Total revenue is seen down 8% QoQ, dragged by
a 14% QoQ fall in total market volumes, dismal IB fees and slowing
interest income.
…rise of options segment pressurises yields
The contribution of the options segment is rising rapidly. It now
stands at 70% (50% in Q1FY11, 64% in Q4FY11) of total market
turnover and 78% (34% in Q1FY11, 71% in Q4FY11) of total
derivatives turnover.
Falling share of cash turnover (10% of total market turnover) and
rising share of low yielding options segment is pressurising broking
yields. This along with falling market share is curtailing growth of
brokerage income for organised players.
Finance income slowing down…
Interest income, which drove topline growth for major players from
FY08, is expected to moderate due to pausing loan growth. Hence,
the delta for revenue growth is missing for major players.
We, therefore expect 8% QoQ decline in total revenues of the Idirect
broking universe. EBIDTA margins will be under pressure as
well on account of high operating expense. Bottomline is seen down
20% QoQ (for the second quarter in a row), 36% YoY.
The sector is aligning towards cost pressures by downsizing
employee strength. Under such a scenario, we expect consolidation
in the year ahead. Players with a strong balance sheet should
manage to withstand the slowdown. Though the stocks are available
at compelling valuations, we advise caution as positive trigger are
not visible in the near term.
Company specific view
Edelweiss Capital A mild fall in market share along with a drift in blended yields will cloud topline
growth. Higher operating expense will weigh on bottomline growth. PAT is,
therefore, seen down 24% QoQ, 46% YoY
India Infoline The exponential growth in the financing book over the past eight quarters is
expected to haunt impacting financing income. Brokerage revenues will dip QoQ
due to falling yields. PAT is seen down 21% QoQ
Motilal Oswal Low cash volumes will impact MOSL. IB and AMC fees is seen sluggish QoQ
while the EBIDTA margin is expected at 27% leading to PAT declining 14% QoQ
Source: ICICIdirect.com Research
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