Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Share India Securities Ltd (BOM:540725, Financial) reported a 24% year-on-year increase in consolidated revenue for Q2 FY25, reaching INR453 crore.
- The company's consolidated profit after tax grew by 10% year-on-year to INR124 crore, with a 21% increase compared to the previous quarter.
- The net profit margin improved to 27.45% from 24.86% in the previous quarter, indicating better profitability.
- The company has a low debt-equity ratio of 0.14 times, suggesting strong financial health and low leverage.
- Share India Securities Ltd (BOM:540725) is expanding its product portfolio and geographical presence, including international expansion through Gift City and a subsidiary in Singapore.
Negative Points
- The company faces challenges from regulatory changes by SEBI, which could impact trading volumes and require strategic adjustments.
- There is a potential negative impact on smaller traders due to increased lot sizes, which may reduce their market participation.
- The reduction in weekly expiries from 20 to 10 could initially impact trading volumes, although the company expects stabilization in the long term.
- The NBFC business is experiencing stress with increased gross NPA levels, particularly in the unsecured loan segment.
- The company's focus on expanding into new verticals and international markets may require significant investment and could face execution risks.
Q & A Highlights
Q: How many active clients does Share India Securities currently have, and what is the plan to acquire 2 to 3 lakh customers?
A: Currently, Share India Securities has around 12,000 active customers. The company plans to reach 2.5 lakh customers over the next three years by focusing on product orientation rather than just marketing. They are also expanding their product offerings, including mutual funds and insurance, to attract more clients. (Sachin Gupta, CEO)
Q: What is the strategy to manage the high gross NPA in the NBFC business?
A: The company is focusing on collateral-based lending, such as loans against property, to reduce NPA pressures. They are also selecting stable markets and reducing exposure in volatile areas. The aim is to balance the loan book with 50% collateral-based and 50% unsecured loans. (Sachin Gupta, CEO)
Q: What is the expected revenue split from the subsidiaries in the future?
A: Currently, subsidiaries contribute around 3% to the topline. The company expects this to grow to 25% of profitability by FY25, with a long-term target of 30-35% revenue contribution from subsidiaries. The focus is on specialized businesses like insurance and merchant banking. (Kamlesh Shah, Joint Managing Director)
Q: How is Share India Securities performing in the SME IPO market?
A: Share India Securities holds a 3% market share in terms of the number of IPOs. They are focusing on larger ticket size IPOs and expect to maintain or increase their market share. The company has six DRHPs filed and plans to complete 15 IPOs by March 31. (Unidentified Company Representative)
Q: What strategies are in place to grow the AUA (Assets Under Administration)?
A: The company is transforming its distribution business into a wealth management business. They plan to launch new products like PMS and AIF and integrate mutual fund offerings with their retail platform to enhance cross-selling opportunities. (Unidentified Company Representative)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
